Oral Answers to Questions

WORK AND PENSIONS

The Secretary of State was asked—

Freud Report

John Penrose: What assessment he has made of the implications for his Department's budget of the recommendations of the Freud report on welfare to work.

John Hutton: The Government have welcomed the publication of the Freud report and are giving careful consideration to its recommendations and their financial implications. We hope to respond more fully later this year.

John Penrose: I think that I thank the Minister for that reply, but could he please give us a bit more detail, particularly on his quantification of the risks that one or more of the prime contractors will fail to deliver what they are supposed to achieve? Does he agree that two substantive risks need to be both quantified and managed? First, the prime contractors may fail to engage with one or more important groups of vulnerable jobseekers in their area because they will have a regional monopoly. Secondly, as commissioning bodies, they may fail to develop the capacity of the local voluntary and third sector organisations that will deliver the services on the ground.

John Hutton: I agree with the hon. Gentleman about the risks involved in proceeding along the lines that David Freud has recommended, which is why we have not yet made any final decisions. The hon. Gentleman mentioned a number of those risks, and rightly so. It is worth reminding ourselves that, although David Freud proposed a network of regional monopolies, as the hon. Gentleman suggested, he felt that there could be some circumstances in which we should not proceed along those lines. Although tremendously exciting opportunities are opened up by Freud's report to target more effective help and support on those who are hardest to reach and have proved to be the most difficult to get into employment, it is right that we look carefully at his recommendations. Obviously, we need to do some more modelling with the Treasury, but I am confident that we can find a way forward. David Freud was right also to suggest that the most sensible thing to do, if we can model the proposals and manage the risk carefully, would be to test the proposals in a number of pilots, and I think that is the right way to proceed.

Frank Field: Given the record number of new jobs under this Government and the record expenditure on welfare to work, how do the Government account for the only modest fall in inactivity rates?

John Hutton: I think that 1 million people have been taken off benefits and, as my right hon. Friend would acknowledge, as others have, including the Organisation for Economic Co-operation and Development, Britain has an outstandingly good track record on welfare reform. The significance of David Freud's report is that although he has—rightly—charted the success of the new deal and other interventions that we made, his prescription, looking forward, is right and we must now target an increasing share of our available resources on the hardest to reach and particularly those who are economically inactive, such as lone parents and people on incapacity benefit. That is very much what we want to do, and I look forward to my right hon. Friend's support when we do so.

David Laws: If the Government are doing so well on welfare reform, why is the male employment rate in the United Kingdom now 10 percentage points below what it was under Harold Wilson, and why must we wait another six to eight years for David Freud's proposals to be implemented?

John Hutton: There you have it, Mr. Speaker: the curmudgeonly voice of the Liberal Democrats. It is worth making the obvious point: we have never claimed that every problem has been solved, and it is clear from the Freud report that that is so. However, it would be futile and rather pathetic not to acknowledge the progress that has been made. The employment rate in the United Kingdom is now among the highest of all the developed countries in the world and is the highest for nearly 30 years. That is progress. I look forward to the day when the Liberal Democrats come here and celebrate that progress with us, although I suspect from the hon. Gentleman's comments that that will be some time yet.

Roger Berry: The Freud report stresses the particular challenges faced by lone parents not in paid employment who have disabled children. Can my right hon. Friend tell the House what measures the Government plan to take to ensure that there is affordable, accessible and appropriate child care for such lone parents and their children?

John Hutton: I am grateful to my hon. Friend, who will be aware that we have made a significant investment in improving access to child care since we came to office 10 years ago. There is a great deal still to be done, but it is important that that investment goes in. My hon. Friend will also be aware that as part of the work on the comprehensive spending review the Treasury is leading a project to look specifically at disabled children's needs. My personal sense is that we should always look to do more to help families who are bringing up disabled children, and I very much look forward to the outcome of that piece of work.

Anne Begg: There is no disagreement that those with multiple disadvantages need a great deal of input and help if they are to access the job market. David Freud recognises that that will cost a great deal of money. Does my right hon. Friend agree that the best people to get those with multiple disadvantages into the workplace may often be in the voluntary and third sectors, not just in the private sector? Will he ensure that the best quality of help is given to such people to make sure that they are not forced into work that is totally inappropriate for them?

John Hutton: I agree strongly with what my hon. Friend says. When it comes to providing the most effective help and support, we can probably leave on one side a lot of the outdated ideology. We should look for the providers that can make the biggest impact. It is significant that virtually all the programmes in the new deal for disabled people have been delivered by the private or voluntary sector—they have been a great success. I urge hon. Members on both sides of the House to approach this with an open mind. We will look to contract with the best providers that hold out the prospect of helping the most people at the best value for money. That is the challenge that David Freud has put down to us and we intend to pick it up.

Michael Weir: The Secretary of State will know that concern has been expressed about the adequacy of the funding of the roll-out of pathways to work under the existing welfare benefits reform. Will he assure us that he will ensure that that is working properly before he embarks on the next phase? Has he held discussions with other Departments and the devolved Administrations about the cost of the child care that will be necessary if he is to push the programme for lone parents with children of 12 and over, especially those in the difficult group of the younger teens?

John Hutton: We will obviously have proper discussions with the Scottish Executive on how to take this forward because, as he knows, child care is a devolved matter. However, it is worth putting on record the progress that has been made in Scotland in the past 10 years or so. We calculate that the jobs dividend to Scotland has been 200,000 extra jobs. Most, if not all, of that progress would be put at risk if the Scottish people were daft enough to accept the hon. Gentleman's advice and move towards independence.

Tim Boswell: Does the Secretary of State agree that as there is a common interest in sustained, long-term employment for these hard to place groups, it is absolutely essential that he does not close his mind to new and innovative organisations that might come along with something fresh to offer, or to specialist organisations that might operate either under the overall umbrella of commissioning or, in certain cases, independently, because of their specialist expertise?

John Hutton: I agree with the hon. Gentleman, and I do not want to close my mind to any of those things. The hon. Member for Weston-super-Mare (John Penrose) properly identified one of the risks. If we go down the road that David Freud has recommended, we will need to ensure that we do not compromise the ability of some of the specialist providers to make a valuable contribution to the welfare to work agenda. I will do everything that I can to ensure that that does not happen.

Philip Hammond: Freud has made several radical proposals, including a progressive reduction in the age of the youngest child at which a lone parent would be expected to seek work. However, in the Secretary of State's speech to last year's Labour party conference, he went further than that and spoke with admiration for the Clinton reforms in the US, a central plank of which was the time-limiting of benefits for lone parents. Will the Secretary of State clear up the confusion about his attitude by confirming to the House that he has specifically ruled out the time-limiting of lone-parent benefits?

John Hutton: I am surprised that the hon. Gentleman asks that question, because I have been asked it at least twice during recent Work and Pensions questions. On each occasion, I made it quite clear that we were not going down the road of time-limiting benefits.

Pensions

Jim Cunningham: What recent assessment he has made of the adequacy of the basic state pension; and if he will make a statement.

James Purnell: The Pensions Commission examined the adequacy of the state pension system and made recommendations for reform. On the basis of those recommendations, we have come forward with our proposals. The International Monetary Fund's 2006 annual assessment, which was published this month, set out its broad agreement with our proposed pensions reform, saying:
	"it will help ensure both adequate saving for retirement and fiscal sustainability".

Jim Cunningham: I thank my hon. Friend for that answer. The work that the Government have done to get pensioners out of poverty is very much appreciated. As part of the coming Budget, will he consider whether to restore the earnings link, which is very important to pensioners?

James Purnell: As my hon. Friend knows, that is slightly above my pay grade. We have made our intention to restore the earnings link very clear. We have said that our objective is to do that in 2012, subject to affordability. It is worth saying that no pensioner has to rely on the basic state pension alone. Pension credit, which we brought in, has reduced the number of pensioners in relative poverty by 1 million. Pensioners are now less likely to be poor than the rest of the population, which is a remarkable achievement at a time of economic growth. According to the Institute for Fiscal Studies, the last time that it was achieved was
	"as a one-off blip ... in the depths of the recession of the early 1980s".
	We have no intention of going back to that.

Mark Field: What message does the Minister have for those who are just entering the workplace about the likelihood of their having an adequate state pension when the time comes to retire?

James Purnell: That is a good point; we are moving from a situation in which women get £90 a week on average from their state pensions to one in which they will get about £130 a week. That is a significant change, and it means that we can tell people who are starting work that if they work or care for most of their lives they will be lifted well above the level of the means-tested safety net, and so will have good incentives to save. That is exactly the message that we should be giving people.

Jeff Ennis: The Minister will know that when pensioners attain the age of 80, they receive a derisory increase of some 25p a week to their state pension. Does he agree that the time is right either to scrap the 25p a week or to raise it significantly?

James Purnell: I am aware of the situation, not least because pensioners have written to me saying that they spent their first increase on a stamp to send me a letter about it, but it is worth putting that increase in the context of our introducing free TV licences for over-75s and winter fuel payments of £300 for people over 80. We recognise that as people get older they need more benefits, and that is exactly what we have provided. As my hon. Friend knows, the policy to which he referred has existed since the 1970s, and neither of the past two Governments have changed it, but we recognise the needs of older pensioners, and that is why we introduced the measures that I mentioned.

Peter Viggers: The Minister has just spoken in favour of the supplementary benefits available to pensioners, but does he realise that those benefits are means-tested, which means that many people have no incentive whatever to save for their retirement? Is he worried about that, and what will he do about it?

James Purnell: I wonder where the hon. Gentleman has been, because the Pensions Commission, which Lord Turner led, has just addressed exactly that point, and the IMF said in its findings that it will address the issue of the incentives to save. The IMF thinks that there is a good policy, and consensus has been built up on what the Pensions Commission supports. If he wants to stand outside that consensus, he is welcome to do so, but I think that we have a good set of policies for the future that will give people good incentives to save.

Jo Swinson: Despite the efforts of the Government and many hon. Members on both sides of the House to publicise pension credit entitlements, nearly 90,000 pensioners across Scotland are missing out on the pension credit to which they are entitled. Does the Minister think that that highlights the injustice of the complex and bureaucratic means-tested system of pensions? Surely it is high time that we moved to a system in which the Government paid a decent state pension, as of right, to everyone.

James Purnell: First, those figures are rubbish, and we told the  Daily Record that before it published them. Secondly, the hon. Lady and her party are committed to scrapping the state second pension and the pension credit; that is what her party leader said recently. About half of pensioners get more from the state pension system than they would from the citizen's pension that her party proposes. I am looking forward to the hon. Lady telling millions of pensioners, at the next election, that the Liberal Democrats propose to reduce their pension by making those changes.

Kelvin Hopkins: Following two decades of the Tories breaking the link between earnings and pensions, our pensions in Britain fell to the lowest level in Europe as a proportion of earnings. The comparisons now may not be as comfortable as we would like to think. Will my hon. Friend undertake to investigate pensions on the continent of Europe and in the European Union, to make a comparison, and to bring that comparison to the Commons with his statement?

James Purnell: There is a process under way within the European Union to do exactly that, but I am afraid that the figures do not show the whole picture. For example, they do not include all private pensions saving, which is important in our system in a way that it is not in other European systems. As a consequence of our proposals to link the state pension to earnings, the state pension will in future be worth twice as much as it would otherwise have been, so that is a big commitment. People in the Labour movement have campaigned for a commitment to a link to earnings for a long time, and I urge my hon. Friend to welcome that commitment as part of his support for our policies.

Nigel Waterson: I am sure that the Secretary of State enjoys his regular cosy chats with the Chancellor, but will the Minister share with us, and with the estimated 3 million older people who will die before the link with earnings is implemented, how the Chancellor can say that the implementation may not be affordable in 2012, yet will definitely be affordable by 2015?

James Purnell: We have set out very clearly how we will finance that, but the interesting thing is the hon. Gentleman's policy. Last time we debated the issue, his colleague the shadow Secretary of State said that he thought that restoring the link was affordable now; the hon. Member for Eastbourne (Mr. Waterson) then contradicted that in Committee; and last week his hon. Friend the shadow Chancellor said that there will not be any more money for pensions. What we are finding out about the Tories is that on presentation they want to face both ways, but on policy they are all over the place.

Disability Discrimination Acts

Andrew Gwynne: What assessment he has made of progress by private companies in meeting their obligations under the Disability Discrimination Acts 1995 and 2005.

Anne McGuire: We published research on 1 March which shows that organisations in the public, private and voluntary sectors are responding very positively to their obligations under the Disability Discrimination Acts.

Andrew Gwynne: I have seen that research and note that it finds that many employers still take a narrow view of disability, focusing mainly on sensory and physical impairments. What is my hon. Friend's Department doing to ensure that all employers take on board their full obligations under the Disability Discrimination Acts to tackle all forms of discrimination against all forms of disability?

Anne McGuire: I thank my hon. Friend for drawing the House's attention to that part of the research, which clearly indicates that there is still a very narrow focus. Some 10.5 million people in Britain are covered by the Disability Discrimination Acts, and not all of them—indeed, a minority—have sensory or mobility impairments. We need to broaden the scope and the impression and view of disability, and we are doing that by engaging with employers and the media and ensuring that people understand that there is a whole spectrum of disability, and not just people who have sensory or motor impairment. Later this year, we will start to roll out a campaign aimed specifically at employers to ensure that that message gets across.

Bob Blizzard: What role does my hon. Friend envisage for local authorities in raising awareness and providing advice to small businesses on their obligations under the Acts? Does she agree that communities can make co-ordinated progress only if local authorities and her Department work with the voluntary sector, including organisations such as the disability information and advice line in my constituency, which my hon. Friend recently visited?

Anne McGuire: I take this opportunity to thank my hon. Friend for arranging that visit, which clearly showed that where good local voluntary organisations work in partnership with other public authorities, they can enhance the message that is conveyed to the wider community. My hon. Friend is perfectly correct: we need to ensure that we use the leverage that local authorities, in particular, can bring to a local community, not just in the dissemination of information, which is crucial, but in how they conduct their own business in delivering services and employing disabled people. The disability equality duty was placed on public authorities to ensure that they do just that.

Personal Accounts White Paper

Richard Ottaway: If he will make a statement on the personal accounts White Paper.

John Hutton: The proposal to establish personal accounts has been broadly welcomed in the House and by many others. The consultation on the detailed proposals set out in the White Paper ends on 20 March, and in the light of those responses, it is our intention to bring forward legislation in the next parliamentary Session.

Richard Ottaway: Given that the public have more faith in the judgment of Lord Turner than the Secretary of State, has the right hon. Gentleman reconsidered his somewhat naive decision to cap those accounts at £5,000 a year instead of £3,000, as proposed by Lord Turner?

John Hutton: Yes.

David Taylor: In the White Paper there is reference to personal accounts being delivered by a modern organisation, managed independently in the interests of its members, and within a framework set by Government. No one could dispute those criteria, but the fourth one—delivery by a private sector firm—would make many people nervous. Does the Secretary of State agree that, given the private sector's track record in that area of pensions, it is not the natural area of society or of the economy to take on a responsibility as important in our pensions policy?

John Hutton: We want a value-for-money solution to implementing the proposed national pension savings scheme, and it is my view that the private sector has the appropriate expertise and experience to do that and provide a good service for the public in the process. At some point, we will obviously need to tender that work, and we will make judgments in due course. However, it is not an area in which Government have the right expertise to take the policy forward.

Adrian Bailey: Does my right hon. Friend agree that minimising costs and charges is crucial to the success of personal accounts? What steps is the Department taking to achieve that?

John Hutton: My hon. Friend is right. Clearly, the lower the annual management charges and costs, the greater the return for those who are saving in the national pension saving scheme. That must be our principal objective in taking forward Lord Turner's proposals. This, however, will be a matter for detailed consideration by the proposed personal accounts delivery authority, but I can assure my hon. Friend and the House that we will work closely with the delivery authority to make sure that this important aspect of the scheme is brought to fruition.

Construction Industry Training

Simon Hughes: What programmes for increasing skills and opportunities for work for young people wishing to enter the construction and related industries are supported by his Department.

James Plaskitt: The responsibility for skills falls within the remit of the Department for Education and Skills. However, my Department offers training and support for young people who take up work in a wide range of occupational areas, including the construction industry, through the new deal for young people. Since the new deal started, nearly 180,000 young people have been helped by the full-time education and training option, and over 85,000 through the employment option. There are already 19,000 young people employed in construction across London, and there is no shortage of further opportunities, given that there are currently around 11,000 vacancies.

Simon Hughes: The Minister is right. The Chartered Institute of Building confirms that seven out of 10 firms are expecting more work this year, and three quarters have difficulty recruiting people with the right skills for the industry. Could he, with his colleagues in the DFES—I appreciate that it is a cross-departmental responsibility—ensure that all the young people who, in constituencies such as mine, are keen to get into the building industry, have not just the initial training, but the opportunity to go from the training into apprenticeship and the work that give them the security of employment that they need, London needs and Britain needs?

James Plaskitt: Indeed, those opportunities exist. The hon. Gentleman may be aware of the on-site training and the job shop at Battersea power station, which I am sure is attractive to many of his young constituents hoping to get into the construction industry. We are working there with Lambeth college and South Thames college. There have been more than 10,000 inquiries to that job shop already, and I am pleased to tell him that as a result 640 young people have gone straight into construction work in London, 43 per cent. of them drawn from the ethnic minority communities.

Bill Olner: Will my hon. Friend speak to his colleagues to ensure that the young people who are enticed into training go on to get full-time apprenticeships—not short, modern apprenticeships—where they can learn all the skills necessary for them to be of use not only to the London area, but to the entire country?

James Plaskitt: My hon. Friend is right. There are extensive opportunities for young people to find employment in the construction industry and to develop skills. He will be pleased to know that £63 million was available to support construction apprenticeships last year, as a result of which 24,000 young people came forward and began construction apprenticeships. We are grateful for the fact that there are 15,000 employers around the country offering construction partnerships.

Philip Hollobone: In the past 10 years, the number of young people aged 16 to 18 not in education, employment or training has risen by 27 per cent. What does the Minister intend to do about that?

James Plaskitt: As the hon. Gentleman will know, a number of schemes have been extremely effective already in helping young people find work. I suggest that he looks at the results of the new deal for young people. Some 700,000 young people have gone through the new deal for young people programme, and as a result we now have a very low level of youth unemployment. The programme has helped us virtually eradicate long-term youth unemployment.

Jim Sheridan: Has my hon. Friend given consideration to tapping into the skills and expertise of construction workers who have had to retire through ill health or personal injury? That would be a double whammy, in the sense that it would take them away from daytime television and pass on their skills to the young people who need them. Such a scheme would need the support of the appropriate trade unions, and should not affect their benefits.

James Plaskitt: My hon. Friend is right: those who formerly worked in the construction sector have an enormous range of skills of which we can make use. In many parts of the country, learning and skills councils, when they are delivering locally, are engaged in that process, as are colleges. He will be aware that the Scottish Executive are looking at ways of developing those ties even further.

Andrew Selous: David Freud has talked of a "poverty of skills" in the UK, yet only 11 per cent. of benefit claimants who lack everyday literacy and numeracy skills complete a basic skills qualification. Will the Government now assess all new claimants so that those with reading or maths needs, for example, can participate in training as soon as they make a claim, without having to wait six months for an assessment?

James Plaskitt: David Freud also pointed out that the Government have a "genuinely impressive record" in helping young people to gain the skills to find work. If the hon. Gentleman cares to look at the skills base that exists for young people, the opportunities for acquiring skills, the expansion of the further education sector and the contribution made by the new deal for young people, he will accept that the opportunities now are far greater than they were 10 years ago.

Lone Parents (Employment)

Robert Wilson: What recent assessment his Department has made of the employment rate among lone parents.

John Hutton: The lone parent employment rate now stands at 56.5 per cent.—an increase of more than 11 percentage points since 1997—and is at the highest rate since records began.

Robert Wilson: I thank the Secretary of State for that answer. A survey of 1,000 lone parents undertaken by One Parent Families showed that a staggering 71 per cent. of non-working lone parents cited lack of child care or of flexible working as a reason for not being in paid employment. Does not that highlight the Government's 10-year failure to offer lone parents a real choice between employment on the one hand and dependency on the other?

John Hutton: No, I do not think that achieving the highest ever recorded rate of employment for lone parents can fairly or reasonably be described as a policy failure in the way that the hon. Gentleman tries to do. It is worth pointing out to him and his hon. Friends that we have made an historic investment in child care. We have introduced new legislation, for example, to allow people the right to request part-time working, which he and his hon. Friends opposed. Of all the people in the House who can lay down the law about what more needs to be done about lone parents, the hon. Gentleman is certainly not among them.

Mark Pritchard: Given that child care support is a key element of getting lone parents back into the workplace, what support is being given to teachers, classroom assistants and schools to provide breakfast clubs and out-of-school clubs, which already have a huge amount of work to do? Although I applaud the Government, schools need support if those proposals are to be brought forward.

John Hutton: My right hon. Friend the Secretary of State for Education and Skills speaks for those matters in this place, but it is true that the Government have made a significant investment of additional funds into that sector as well. That has been broadly welcomed. In relation to the point to which I think the hon. Gentleman was alluding about conditionality as an entitlement to benefit, we have to match that to the availability of child care locally so that we are not asking lone parents to do something unreasonable in taking more active steps to get back into the labour market, but if we continue the investment, I think that we will get to that point. We should now have that debate in the country as a whole.

Andrew Miller: In my constituency, the progress in the increase in employment among young people can almost be mapped against the development of the tax credit system. Is that a common feature across the country? Is there an absolute parallel? If so, is that because we have put so much into child care through that system?

John Hutton: A number of factors explain the significant increase in the lone parent employment rate. Obviously, the strength of the economy generally has helped; so, too, has the new deal for lone parents. The hon. Member for Reading, East (Mr. Wilson) should know that it has helped more than 400 lone parents in his constituency to get back to work—a policy that his Front-Bench team opposes. The policy of making work pay through tax credits, the national minimum wage and now the in-work credit for lone parents who come off benefit and into work has made it possible for us to increase substantially the rate of employment for lone parents. However, we need to do more. That is obviously the case. It is what Freud highlighted and it is what we are now looking to do.

Inactive Benefits

Anne Snelgrove: What his assessment is of progress in reducing the number of people on inactive benefits.

Jim Murphy: There are more people in work in the UK than ever before. There are also 900,000 fewer people on out-of-work benefits compared with a decade ago. However, there is more we can do, which is the purpose of the Welfare Reform Bill and, of course, the Freud review.

Anne Snelgrove: What is my hon. Friend's view on the proposals in the Freud report to do more for the existing group of people on long-term incapacity benefit by extending obligations for them to participate in work-related activities, as long as that is supported? The proposals currently cover new claimants only.

Jim Murphy: My hon. Friend is absolutely right. David Freud has suggested an innovative and imaginative way of supporting existing incapacity benefit customers. The core point is that no one should ever be written off, which has happened for so long in our welfare system. One in six current incapacity benefit customers have dependent children, so there is a real opportunity to lift those families out of poverty.

Julie Kirkbride: Will the Minister answer the question which the Secretary of State ducked when the right hon. Member for Birkenhead (Mr. Field) posed it earlier? Why is it that when the Government claim such success on employment levels and the number of people who are actually in work, the number of people who are inactive but of working age has barely changed over the past decade?

Jim Murphy: My right hon. Friend the Secretary of State has answered that question on three separate occasions. In case the hon. Lady missed the answer on every one of those occasions, there are 900,000 fewer people on out-of-work benefits than there were when her party was in power. To break it down, that equates to 250 people on every single day for the past decade leaving benefits and entering work to provide for their families, which is real success.

Eric Illsley: Will my hon. Friend ensure that the quality of the medicals that incapacity benefit claimants must undergo as part of the welfare to work process is very good, because yet another case was raised with me by a constituent over the weekend? My constituent has been unable to work because of a disease so serious that I cannot pronounce it. The doctor who undertook the medical for that young lady failed to recognise any of the well documented and serious symptoms, which means that my constituent must use the appeal process in order to pursue her claim for benefit. Can the medicals that are provided to claimants be improved?

Jim Murphy: We can improve the medical procedures to support incapacity benefit customers, particularly when we review the personal capability assessment, which is part of the architecture that supports the Welfare Reform Bill. Incapacity benefit assessments have not kept pace with the changing nature of disability in this country—for example, there has been a big increase in those who report a fluctuating mental health condition, and attitudes in society have changed towards people with a learning disability and their role in the place of work. Supporting people with learning disabilities to have a chance to play a meaningful role in the workplace can be an important part of the revision to which my hon. Friend has referred.

Child Poverty

Philip Dunne: What discussions he has had at the UN on the recent UNICEF report on child poverty.

Jim Murphy: I have not had any discussions at the UN since the recent UNICEF report on child poverty. If I had, I would have confirmed that in the space of a decade the UK has gone from the worst position in the EU to the greatest improvement in child poverty levels.

Philip Dunne: The Minister has demonstrated breathtaking complacency in relation to the UNICEF report. We were placed 21st out of 21 for childhood well-being, which is bottom among the Organisation for Economic Co-operation and Development countries. After 10 years in power, to which the Minister has referred, surely that is the legacy of the Prime Minister. The Government have attempted to concentrate on education, but we are near the bottom of the tables for educational well-being, for childhood material well-being and for two-parent relationships for children.

Jim Murphy: I am mildly sceptical about the UNICEF report. I think that it was actually unfair to the Government. [Hon. Members: "Aw!"] Those are not my comments; they are the comments of the hon. Member for Surrey Heath (Michael Gove), who is a shadow Minister. Perhaps the hon. Member for Surrey Heath knows a little more about the subject than the hon. Gentleman, given that the report interviewed children who were born between 1985 and the early 1990s. While we still have many things to do to reduce and eradicate child poverty, we cannot be held accountable for the mistakes, misgivings, errors, poor policies and increases in child poverty that happened on his party's watch.

Ben Wallace: In a recent submission to the Scottish Affairs Committee, the Rowntree Foundation said that while the tax credits system was lifting lone parents and children out of poverty, it was driving couples with children into poverty. Does the Minister recognise that as having some element of truth? If so, what steps will he take to review the tax credits system to ensure that couples are not being penalised in this way?

Jim Murphy: It is important that we support everyone who gets the opportunity to go into work to lift themselves and their entire family out of poverty. However, the same report supported the expansion of Sure Start, the national minimum wage, the introduction of tax credits, flexible working, and maternity and paternity leave, all of which have helped to lift children out of poverty and all of which were opposed in policy terms or investment terms by the hon. Gentleman and his party.

David Amess: What recent assessment he has made of the level of child poverty in the UK; and if he will make a statement.

Anne McGuire: In 2004-05—the latest period for which data are available—2.4 million children were living in relative poverty in Great Britain. That represents a fall of 700,000 since 1997. As a result of our reforms to the tax and benefit system and the national minimum wage, by April 2007, in real terms, families with children will be an average £1,550 a year better off, while those in the poorest fifth will be an average £3,450 a year better off.

David Amess: Save the Children claims that 55 per cent. of families with disabled children are living in poverty. It costs three times as much to look after disabled children as it does children who are not disabled. Will the Minister tell the House exactly how the Government are addressing that problem?

Anne McGuire: As my right hon. Friend the Secretary of State said earlier on in questions—I appreciate that the hon. Gentleman did not hear him—it is important to improve matters for disabled children as well as non-disabled children in poverty. Let me be clear to him. We know that disability costs extra; that is why we have a disability living allowance that supports families, including those with children, where there is a disability. Of course, we will ensure that as part of our child poverty strategy we take particular cognisance of the issues affecting disabled children.

Diana Johnson: Can my hon. Friend confirm that the target of eradicating child poverty by 2020 is still a firm target, not an aspiration, showing that we are still committed to dealing with deprivation in all our communities?

Anne McGuire: I am delighted to reconfirm our commitment that by 2020 we will have an eradication of child poverty in this country. That stands in stark contrast to the position of the Conservatives, who initially thought that they were giving a commitment, and then decided that it was not so much a commitment as an aspiration.

Philip Hammond: Unmet targets are empty rhetoric.

Anne McGuire: I can tell the hon. Gentleman one target that the Conservatives met when they were in power—they increased the number of children who had to live in poverty. To be frank, that should bring shame to him and to his whole party.

Jeremy Hunt: Given the link between workless households and child poverty, and the fact that the mother of a disabled child is seven times less likely to be in work than other mothers, what specific policies will the Minister's Department bring forward to attack that problem? In particular, will she talk to colleagues at the Department of Health about the problem of a lot of social services delivery happening in working hours, making it very difficult for parents with disabled children realistically to consider working?

Anne McGuire: The hon. Gentleman touches on a genuine problem for the parents of many disabled children: how to manage the support of their disabled child while working, as many want to do. Of course, working together is vital and I am sure that my colleagues in the Department of Health will have heard the hon. Gentleman's question, as well as Ministers in other Departments who have connections with local authorities. We need a joined-up approach to supporting disabled children and their families. We held the Prime Minister's strategic overview, "Improving the Life Chances of Disabled People", to encourage Departments to work together to ensure that nobody falls through the gaps in our public service provision when we can, by joined-up working, improve the lot of disabled children and disabled people in general.

Maria Miller: The Government's recently released figures suggest that, when regional income is taken into account, relative child poverty in London could be more than one third higher than the current official figures based on national median income suggest. Is the Minister confident that she can tackle relative child poverty issues without examining regional variations in income? What will she do to ensure that the matter is properly considered during the current review of the Government's child poverty strategy?

Anne McGuire: I can give the hon. Lady a commitment that we will review the matter that she identifies as part of our child poverty strategy. As I said earlier, it is a massive challenge to any Government because, as my hon. Friend the Minister for Employment and Welfare Reform noted, we inherited a position when Britain was at the bottom of the league for child poverty. We now have the best record of any Government in the EU on lifting children out of poverty. However, we are not complacent. We know that there is still a lot to do and we are committed to our target, unlike the hon. Lady and her party, which still perceives it only as an aspiration.

Pensions

Ann Winterton: What support his Department is giving to those who lost occupational pensions prior to the introduction of the Pension Protection Fund.

James Purnell: The Pensions Act 2004 puts in place a range of measures to provide support, advice and protection to schemes and scheme members. In particular, the financial assistance scheme provides support to members of defined benefit occupational pension schemes that started to wind up, underfunded, between 1 January 1997 and 5 April 2005.

Ann Winterton: The High Court recently ruled that the Government were completely wrong to reject the parliamentary ombudsman's report on failed pension schemes. The Secretary of State subsequently told the House that the Government would re-examine the report. What can the Minister tell the House today about that? What can the Government devise to assist scheme members who have been so hard hit? Will he take a leaf from the book of the right hon. Member for Birkenhead (Mr. Field) and perhaps consider using unclaimed bank and building society assets for compensation?

James Purnell: We will look at suggestions from hon. Members of all parties, as my right hon. Friend the Secretary of State made clear in his statement on 22 February. He also said that we were examining the financial assistance scheme in the light of the European Court of Justice case. We have made a commitment to pay the claimants' costs in the appeal to ensure that they are not disadvantaged. We have said that we will come back to the House as soon as possible—certainly before the Pensions Bill completes its passage.
	I want to correct one point that the hon. Lady made. The court did not find against the Government on all aspects. It found against the Government on the 1996 leaflet that was issued and upheld the Government's case on causality and the operation of the minimum funding requirement.

George Young: Does the Minister recall an uncomfortable debate before Christmas, when he was almost isolated in the House in rejecting the recommendations of the ombudsman and the Public Administration Committee? Will he confirm that the Government do not wish to have a confrontation with Parliament on the matter and that, against that background, he does not rule out giving financial assistance to the group of pensioners whom my hon. Friend the Member for Congleton (Ann Winterton) mentioned?

James Purnell: The question has always been one of proportionality. We introduced the financial assistance scheme and extended it to more than £2 billion. We recognise that people in these circumstances face the real personal tragedy of losing their pensions. We have always said that the financial assistance scheme is there for exactly that reason—to reflect that loss of pension. The question has always been what we can justifiably ask the taxpayer to pay. In that debate, I made the case on the issue of causality that we did not agree with the ombudsman that we were responsible for the whole of the losses and should therefore make good the whole of the losses—and the court actually upheld that part of our argument.

Department/GP Communications

Rosie Cooper: If he will make a statement on steps being taken to modernise communication methods between his Department and GP surgeries.

James Plaskitt: We are aware of the critical importance of the role of GPs in shaping customers' perceptions about their ability to return to work, and we are piloting the use of employment advisers in GP surgeries to give patients advice about the work-related support and to offer them non-medical help to achieve their work aspirations. To assist GPs, we also have two projects testing the electronic transmission of data between GPs and our Department via a secure link. We are also developing educational and training packages in conjunction with the Royal College.

Rosie Cooper: Can the Minister tell me what else is being done to help GPs get their patients back to work and whether the Government will consider allowing those not fully fit for work to attend very short part-time training courses to enable them to get back to work more quickly?

James Plaskitt: Yes, we are doing a variety of things. As I think my hon. Friend will know, we are testing the pathways advisory service—indeed, the pilot is in east Lancashire, close to her constituency. We are also piloting the electronic transfer of data to facilitate the process for GPs. As I said in my earlier answer, we are developing education and training packages. My hon. Friend makes a very helpful point in respect of the further assistance that we might offer and I would be happy to look further into it.

HOUSE OF COMMONS COMMISSION

The hon. Member for North Devon, representing the House of Commons Commission, was asked—

Recycling

Jo Swinson: What target he has set for the percentage of waste from the parliamentary estate to be recycled in 2007.

Nick Harvey: The House has set a target of 44 per cent. for recycling of waste in 2007-08. The current policy for waste recycling is to increase the target by 5 per cent. each year. The percentage of waste recycled during 2005-06 was 35.9 per cent. and the quantity of waste recycled was 800.72 tonnes.

Jo Swinson: I thank my hon. Friend for that reply and I am sure that all hon. Members will welcome the success in increasing recycling in the parliamentary estate. However, does the House of Commons Commission share my concern that the total waste produced by the parliamentary estate last year actually grew by 17 per cent? Given the priorities of "reduce, then re-use, then recycle", what steps will be taken to reduce waste overall?

Nick Harvey: I am pleased that my hon. Friend recognised the progress made on recycling, but if her point is that the actual volume of waste overall should be the greater focus of our efforts, I am sure that the current awareness campaign could broaden its scope to take that into consideration. I reassure her that the issue of paper waste from early-day motions and parliamentary questions is an issue of concern and that the Procedure Committee is currently looking further into policies on that matter.

David Taylor: While it is in the House's interest to drive up rates of recycling, as the hon. Gentleman mentioned, is it not in the national interest that we drive down the recycling of waste draft policies emanating from the Opposition Front Bench, which fall apart at the first examination in the first light of day? Is it not in the national interest to minimise all that effort?

Nick Harvey: I am sure that it is indeed in the national interest to minimise the degree of waste, but whether the Procedure Committee can quite go as far in scope as the hon. Gentleman suggests, I am not too sure.

LEADER OF THE HOUSE

The Leader of the House was asked—

House of Lords Reform

Mark Pritchard: When he expects to be in a position to bring forward legislation on reform of the House of Lords.

Jack Straw: Before answering this question, I would like to say a few words. As the House will be aware, the Deputy Leader of the House of Commons, my hon. Friend the Member for Edinburgh, South (Nigel Griffiths), tendered his resignation to my right hon. Friend the Prime Minister earlier today. I would like to place on record my appreciation of the excellent work that my hon. Friend undertook in this post.
	To answer the question, following the debates and votes here last Tuesday and Wednesday, the House of Lords is holding its debate on the future composition of the Lords today and tomorrow, with the votes planned for Wednesday. I have said all along that we must wait until the other place has expressed its view. I then intend to reconvene the cross-party group that I chair and obviously to discuss the matter within Government. I will return to the House in due course to make a detailed statement on the way forward.

Mark Pritchard: I am grateful to the Leader of the House for that response. Notwithstanding his comment about waiting, press reports over the weekend have suggested that, on the back of those votes, he felt an obligation to press ahead with House of Lords reform. Does he believe that the right hon. Member for Kirkcaldy and Cowdenbeath (Mr. Brown) feels a similar obligation?

Jack Straw: My right hon. Friend the Chancellor of the Exchequer voted for an 80 per cent. elected House of Lords, so I think that the answer to the hon. Gentleman's question is yes.

David Winnick: Is it not clear that the chances of reaching consensus with the House of Lords on this matter are very remote indeed? Bearing in mind the fact that the 80 per cent. vote was carried by 305 to 267, are the Government sufficiently determined to use the Parliament Act if necessary—and it looks like it will be—to ensure that the will of this House is implemented?

Jack Straw: I do not want to anticipate the outcome of what will no doubt be vigorous discussions with the other place, but it certainly does not lie in the hands of any one Member of this Chamber to decide to abrogate the law of the land, and the Parliament Acts are the law of the land.

Peter Bottomley: When the Leader of the House convenes his all-party group, would it not be wise, as well as considering the Lords, to consider cutting the number of people in the House of Commons by about a third— [ Interruption. ]

Jack Straw: The Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Warwick and Leamington (Mr. Plaskitt), asks whether the hon. Gentleman is offering. I have a lot of time for the hon. Gentleman, but I honestly think that the cross-party group on the future of the Lords will have enough work to do without doing that as well; that is for another group.

Patrick Cormack: When the Leader of the House reconvenes the all-party group, will he bear in mind the fact that, last week, only 80 Conservatives voted for the party's official policy, and that 98 voted against it?

Jack Straw: That is more a matter for the Leader of the Opposition to bear in mind than for me. That was the hon. Gentleman's party's manifesto commitment. If he is saying that the Conservatives' manifesto commitments cannot be trusted, of course I agree with that proposition.

George Young: In advance of the legislation referred to in the question, and against the background of last week's vote, would it not be sensible if the Prime Minister made no more political appointments to the upper House?

Jack Straw: That is a matter for my right hon. Friend the Prime Minister. The present arrangements will have to continue unless and until we have a reformed Chamber; I would have thought that that was a statement of the blindingly obvious.

Douglas Hogg: May I suggest that the Leader of the House consult as widely as possible on this matter? There are divided views within parties and across the Chamber, and this is not a matter on which the Front Bench can compel its Back Benchers to vote.

Jack Straw: What the right hon. and learned Gentleman has just said is the self-evident truth, and I agree with his suggestion of consulting as widely as possible. I do not agree, however, that convening the cross-party group is incompatible with wider consultation.

Andrew MacKinlay: Did the Leader of the House interpret the vote for a 100 per cent. elected House of Lords as a mandate—indeed, an instruction—to abolish the archaic system whereby Church of England bishops have ex officio seats in the legislature?

Jack Straw: I did not interpret the vote in any way; I simply read the words on the Order Paper. It was a vote, in the opinion of the House, for a 100 per cent. elected Chamber.

Theresa May: May I assure the Leader of the House that the Conservatives are also sorry not to see the hon. Member for Edinburgh, South (Nigel Griffiths) in his place alongside him any longer? On the reform of the upper House, the right hon. Gentleman listened to the views of this House about his proposed preferential ballot system. He also listened to the views of the House when it rejected his White Paper and voted for a more democratic upper House. As he looks towards legislation, will he now listen to the views expressed by hon. Members across the House about the list system of proportional representation that he is proposing for the elections to the upper House?

Jack Straw: My proposal was for 50 per cent. elected, but it was made clear that that was not the Government's proposition. The right hon. Lady was consulted extensively on our White Paper, and she knows that it contains a great deal that has all-party agreement. I said last week that we will listen to proposals for altering the electoral system, and it is important that the House move on that by consensus as far as possible. Before she tries to makes a party point about the semi-open list, let me say that that proposal originated from the Wakeham royal commission on which several of her distinguished colleagues and former Conservative Cabinet Ministers sat, along with Liberal and Labour Members.

David Heath: I also extend my best wishes to the hon. Member for Edinburgh, South (Nigel Griffiths). I hope that nothing that any of us said on Thursday precipitated his decision.
	In the euphoria that followed the surge of radicalism last Wednesday, the Leader of the House said two things: first; that he would reconvene the all-party group; and secondly, that he could not pre-empt the Queen's Speech by announcing legislation. Irrespective of what another place says, will he ensure that the cross-party group is convened, and that it is convened before Easter? Will he also make it clear that legislation will follow in the next Session of Parliament?

Jack Straw: On the hon. Gentleman's first point: would that the decision of my hon. Friend the Member for Edinburgh, South were related to something that was said in the House last Tuesday and Wednesday! On his second point, I cannot anticipate the Queen's Speech. As for a meeting of the cross-party group, we will get it together as quickly as possible, although I cannot say for sure that it will meet before Easter; if we can have a meeting, we will. My noble and learned Friend the Lord Chancellor mentioned this afternoon, as I did last Wednesday, the possibility of producing a draft Bill, but that must be discussed by the cross-party group.

Programming of Legislation

Nicholas Winterton: If he will undertake a review of the programming of legislation.

Jack Straw: Both the Modernisation and Procedure Committees considered that subject towards the end of the previous Parliament. Following their reports, the House approved changes to the relevant Orders—including making them into permanent Standing Orders—in October 2004. The Modernisation Committee also touched on the subject in its report last year on the legislative process. The Government have no current plans to conduct a further review of the operation of programming or to ask the Modernisation Committee to conduct such a review.

Nicholas Winterton: Does the Leader of the House accept that the programming procedure is thoroughly unsatisfactory to both sides of the House? It does not allow Back Benchers on either side of the House to participate properly in many important debates. Will he consider that matter again? Can I make a plea to the usual channels—of which I have never been part—to give more authority back to the Back Benches? In that regard, will the Leader of the House please consider setting up a business committee duly representative of the Back Benches?

Jack Straw: There is a wider issue about Back Benchers' involvement in the business of the House. As a senior member of the Modernisation Committee, the hon. Gentleman knows that it is currently considering the use of non-legislative time and ways in which the role of the Back Bencher can be strengthened. The programming arrangements are not wholly unsatisfactory; they are a great deal better than those to which he and I were used when we first came into the House, when there was no programming and a ritual of Opposition Members talking Committees into the night, then going for guillotining and not considering Bills in any detail. We were always ready to consider proposals for improving arrangements, and we did so in the summer of 2004. I am not certain that his specific proposal, made when he was Chairman of the Procedure Committee, of a 48-hour gap between Second Reading and agreement on the Sub-Programming Committee, would produce any benefits. That is the issue—nothing else—between us.

European Council

Tony Blair: With permission, Mr. Speaker, I shall make a statement about the European Council summit that took place in Brussels on 8 and 9 March.
	There were three main agenda items for the summit. First, the Council agreed to cut the administrative burden arising from EU legislation by 25 per cent. by 2012. This has long been a key British objective. It was a major part of the United Kingdom presidency of the EU in 2005, and it mirrors our own Government's decision made last year. This decision makes another clear break with traditional European policy on regulation, and is hugely to be welcomed. It follows up a recent Commission decision to withdraw some 78 pieces of legislation—the first time that the EU has done that. I congratulate the Commission, and especially President Barroso and Commissioner Verheugen, on their determination. The decision has full British support.
	Secondly, the Council agreed on an action plan to liberalise the energy market. The centrepiece is to free up the distribution of energy across the European Union to create a genuinely competitive, interconnected and Europe-wide internal energy market. That will bring major benefits for EU consumers, improve the security of supply, and strengthen European competitiveness. The European Council decided in particular that supply and production activities should be separated from network distribution to allow competition on the networks, as already happens in the UK.
	Ever since the Hampton Court summit of October 2005, energy liberalisation and security of supply have been key objectives of ours for the European market. It is true that we still need to do more in Europe, especially in respect of the vertical integration of energy companies. Nevertheless, this means that for the first time, at least at distribution level, British companies can compete on equal terms with French or German companies—in particular, in France and Germany, not just here in the UK. That will bring reduced costs to business and to customers, and again it has our full support.
	Thirdly, and most importantly, the European Council committed itself for the first time to a binding Europe-wide environment target: a 20 per cent. reduction in greenhouse gas emissions by 2020, compared with 1990. Moreover, the European Union undertook to go further and achieve a 30 per cent. reduction in emissions by 2020, if this was part of a wider international agreement. Until last week, no group of countries had committed itself to such deep reductions. This is a landmark decision, which will mean changes in all member states' domestic policies.
	The Council also agreed on a binding commitment that renewable energy will comprise some 20 per cent. of overall EU energy consumption by 2020. However, the agreement allows for differentiated national targets within that overall EU objective. In particular, it recognises that for some member states, nuclear energy will play a significant role in achieving overall climate change targets.
	The Council agreed a 20 per cent. increase in energy efficiency, again by 2020. It also recognised the importance of clean coal technology. We welcomed the Commission's undertaking to support, by 2015, the construction and operation of up to a dozen commercial-scale clean coal demonstration plants, with a view to all new coal-fired power stations' being fitted with carbon capture and storage technology by 2020. That technology must be a crucial element in the overall response to the climate change challenge, and it is important that we signal that to investors now. Clean coal can be part of the future.
	All these targets impel us towards a far more ambitious European emissions trading scheme. The Commission President is currently negotiating country-by-country caps on emissions for 2008 to 2012. Britain, as he has acknowledged, has helped by setting an ambitious cap for itself. The Commission has proposed that after 2011, aviation should also be within the ETS. We want to make the scheme more transparent, and we want it extended after 2012 to 2020 and beyond. All these proposals are set out in our recent paper to our European colleagues, and we are actively building the alliances in Europe to ensure that they are implemented.
	Of course, these European commitments must be part of wider international action. As the Stern review demonstrated, without concerted international action there will be disastrous consequences for global economic development. The European Council therefore reaffirmed the importance of agreeing a long-term framework to address climate change. It set out a coherent and united vision for how such a wider international agreement would work. It paves the way for further action on climate change at the G8 summit in Germany in June.
	This is, in the end, the crucial prize. It is important that we take action here in Britain, as tomorrow's climate change Bill will show. It is critical for the EU then to show leadership, as it did at the summit in a remarkable and groundbreaking way. For those who doubt the relevance of the European Union to today's world, last week's Council meeting and its historic agreement on climate change is the best riposte. It shows Europe following the concerns of its people, and giving real leadership to the rest of the world.
	Ultimately, only an agreement that is global and includes America, China and India will halt the damage of rising greenhouse gas emissions. Everything else is, of course, justified in its own right, but this is, most of all, a means to that end. The G8 plus 5 dialogue which was started at Gleneagles under the UK presidency in 2005, and which has all the main countries within it, is the forum in which new principles for an international framework can be agreed. The summit in Germany this June will be the time to agree those principles, including a stabilisation goal, a route to a truly global carbon market, support for new technology, adaptation measures and action on deforestation. This is the next stage of the journey to effective multilateral global action on what is the single biggest long-term threat to our world.
	Let me conclude by paying tribute to the leadership of Chancellor Merkel at the European summit. The agenda was bold and she carried it superbly. Unsurprisingly, as the matters it addressed were all fundamental British objectives, we were able to give that leadership full and active support. Once again, that shows the significance of strong, constructive and positive engagement in Europe.

David Cameron: May I thank the Prime Minister for his statement, and may I also do something that he is perhaps not always used to from the Leader of the Opposition after European statements, and congratulate him on helping to negotiate a successful outcome to the European Council?
	We very much welcome the agreements on deregulation and liberalisation of the energy market. We have long shared those goals. The Prime Minister said that they had been goals of the British Government since 2005; I can well remember their being goals of the British Government in the 1980s. We welcome in particular the agreement to cut EU greenhouse gases by 20 per cent. by 2020. In our view, that is an essential step towards ensuring that there is the necessary international and domestic action to combat climate change.
	The Prime Minister and I have many disagreements on European policy—no doubt we will continue to do so—but some issues go right across parties and across countries, as these negotiations show. Indeed, I have found out something over the last year, whether in talking to Nicolas Sarkozy, or the Swedish Prime Minister, or the Nordic Foreign Ministers, or the Greeks—[Hon. Members: "Or the Czechs?"] Yes—or indeed the Czech Prime Minister. They all agree. There is a growing consensus on the need to take action on climate change. Indeed, the agreement negotiated in Brussels at the weekend was unanimously agreed by leaders in Europe belonging to all parties and all countries right across the political spectrum, from Spanish socialists to Dutch Christian democrats and from the Italian centre-left to Polish conservatives. It is a consensus that I know that the Prime Minister welcomes as much as I do.
	I have some detailed questions on how we make the 20 per cent. target, which we support, a reality. Clearly, we need to make the EU emissions trading scheme work better. In particular, does the Prime Minister agree with me that further steps need to be taken to stop European Governments issuing too many carbon permits? Will he confirm that those steps can be taken and that that does not require some deep institutional reform of the EU? Will he agree to a progressive tightening of the cap on such permits?
	We also need to ensure a long-term price for carbon throughout the European economy. In order to make that happen, will the Prime Minister push for the completion of the third phase of the emissions trading system—the phase from 2012 to 2020? The Prime Minister talked about 2008 to 2012, but I would be grateful if he would explain when he thinks the next stage will be completed. Is it not the case that emissions trading needs to be aligned with the new 20 per cent. carbon reduction target?
	Turning to the steps that we need to take domestically in the UK to meet the 20 per cent. target, does the Prime Minister agree that we need a critical path in order to hit that target? I know that he has set his face against these, but will he look again at whether there is a need for annual targets? Does not the recent experience of long-term targets show that such an approach is necessary? The Government have committed themselves to a 20 per cent. cut in emissions by 2010 three times in their manifestos, and we now know that that will not happen. Does not that show that annual targets are necessary? Clearly, all targets need to be backed by independent auditing. What measures will be taken to ensure that targets are independently set and independently audited so that we do not fail to meet them?
	The summit also rightly concluded that we need a separate target for renewable energy as a share of energy consumption. When will we see the country-by-country allocations— [Interruption.]

Mr. Speaker: Order. Please allow the Leader of the Opposition to speak. We gave our courtesy to the Prime Minister; the right hon. Gentleman should be able to respond.

David Cameron: The shadow Leader of the House has lost his deputy, and he is taking it out on the rest of us.  [Interruption.] I am sorry—I meant the Leader of the House. I am getting ahead of myself: he is soon to be the shadow Leader of the House.
	The 20 per cent. target for energy efficiency is also welcome. Performance in the UK on this issue has been disappointing, and it will take a step change to meet the target. The agreements that were reached at the weekend on renewables and energy efficiency have effectively changed Government policy. The Prime Minister said as much in his statement. When does he expect the Minister for Energy to set out the steps that we need to take to meet those targets? In particular, is he planning to change the national grid system to help to decentralise the domestic energy market? What is his plan to ensure that the renewable obligation favours the development of all renewable energy and not just onshore wind power? Above all, does not this European summit show clearly that when the EU focuses on real issues such as climate change and global poverty, rather than on centralisation, institution building and agreeing a new constitution, it can take real steps forward that are agreed by everybody?

Tony Blair: I agree that it is important that Europe focuses on those key questions. May I deal first with domestic policy issues? I am against binding annual targets because they are too inflexible. Changes in temperature and in the cost and price of fuel can make a dramatic difference to the economy's ability to cope with such a binding annual target. We have to strike a balance the whole way through between what we do to give leadership here, and not putting our industry in a position where it becomes uncompetitive or our consumers in a position where they get clobbered.
	I am dubious about the right hon. Gentleman's proposals to put VAT on air travel, or a new tax on airline fuel, because they might hit consumers and businesses in this country very hard, while having a small impact on CO2 emissions worldwide. It is important to get right the balance between what we do here and what we do by international agreement, because on it will depend whether we give the right leadership on this issue, as this country has in the past few years, but also whether at the same time we make our businesses uncompetitive and harm our consumers, which would be unfair to them.
	We will set out steps for introducing more measures on energy efficiency, as we have already done in respect of new buildings. For example, it would plainly be sensible to build into the building schools for the future programme, through which we will rebuild or refurbish many schools in the country, measures for the use of environmentally sustainable energy and for energy efficiency. That is very important and is right. Of course, we will also be improving and increasing the amount of money that we devote to research on renewables and to our use of renewable energy.
	I basically agree with the right hon. Gentleman's points about the European emissions trading system, as that is precisely what we are trying to achieve in Europe. We are trying to get a progressive tightening of the cap, and to ensure that there are policies in place for post-2012 and that we extend the scheme. Bringing in aviation will play a major part in that.
	By way of conclusion, I say to the right hon. Gentleman that we will need alliances to build all this. It was interesting, when we got to the discussion about what would be in the Berlin declaration, that there was a general agreement that we should put in a measure on climate change and protecting the environment. I must say that the only Prime Minister who spoke against it was— [Interruption.] It was indeed the Czech Prime Minister. To be fair, however, I must add that he made a very strong statement in favour of nuclear power, so I warmed to him on that.
	The basic point, surely, is that if we want to get this done in Europe—I totally understand what the right hon. Gentleman says about what Europe focuses on; I make the same points myself a lot of the time—we have to recognise that this European relationship is the only way in which we can take critical action and make a critical difference to climate change. If we put at risk the European relationship in any shape or form, we diminish our capability to take that effective action on issues such as climate change. I really believe that this summit, particularly under the leadership of the German Chancellor, has indicated that over the years the agenda that we have been pressing for from this country—some of it, I agree, under previous Governments—has the chance now of really leading the agenda in Europe. We simply do not want to do anything that puts that at risk.

Menzies Campbell: I, too, begin by congratulating Chancellor Merkel on achieving an agreement on the environment, which many people predicted would be difficult, if not impossible.
	I welcome the review of the single market and the efforts to strengthen internal competitiveness. Does the Prime Minister agree that those are a necessary response to the challenges of globalisation and, in particular, the challenges of emerging economies such as India and China? I, too welcome support for a new transatlantic economic partnership, not least because it may be able to create a better political relationship across the Atlantic than the one we have had in recent years. There will be agreement on both sides that reducing the administrative burden of EU legislation by 25 per cent. by 2012 will be welcome, but does the Prime Minister agree that that needs to be matched by Whitehall with resistance to gold-plating and over-interpretation of EU legislation here in the United Kingdom?
	In the discussion of the Mecca agreement and a Palestinian Government of national unity, can the Prime Minister tell us what practical steps, if any, were considered to maintain the momentum of that agreement as a contribution to the middle east peace process?
	It is clear from the Prime Minister's statement that the agreement on the environment was the most significant outcome of the Council. Does he agree that the real test lies not in the fact of the agreement, but in whether it is fully implemented? That leads me to ask him what additional measures the United Kingdom will adopt to meet those targets. I hope it is not too late for him to draw to the attention of the Chancellor of the Exchequer the advantages of using the tax system to encourage environmentally friendly behaviour. Can the Prime Minister tell us whether there is any greater role for the European Union than promoting energy efficiency, and whether he sees any opportunity for the United Kingdom to promote industrial development in renewables such as tidal and solar power?
	Finally, what is the Prime Minister's response to the Council's research and development target of 3 per cent. of gross domestic product by 2010?

Tony Blair: On the latter point, we are, through the research and development tax credit, improving the amount of support we give to industry in increasing its R and D, and the big increase in the science budget has made a difference too.
	In relation to Whitehall, we have made it clear that gold-plating is no longer on the agenda—indeed, we are going back. We have a whole series of mechanisms in place now to prevent it. Occasionally it still crops up, and I assure the right hon. and learned Gentleman that we are vigilant in ensuring that it should not and does not, as there is no point in our over-interpreting European legislation.
	In respect of the national unity Government and the Mecca agreement, what is important is that any such Government, if we are able to support them, are consistent with the Quartet principles in the position that they adopt vis-à-vis Israel. We wait to see whether that takes place.
	As for the United Kingdom, the single most important thing that the UK can do is to be part of a progressively strong European emissions trading system. That is the best thing for us to do and, as I said to the Leader of the Opposition, we have to be careful; we have to strike a balance. We must be careful not to punish our own business and consumers, without ensuring that the measures are also taken at European level.
	On China and India, it is important, of course, to do what we can to encourage them to be part of this wider agreement, but there is another point that is very important indeed. The latest figures from China indicate that it is building a new coal-fired power station every four days. China on its own, incidentally, is also due to build something in the region of 40 airports over the next few years. The single most important thing is to develop the science and technology and then to have the proper method of transferring that technology to the Chinese and the Indians. That is why we need to get an international agreement involving China, India and America that incentivises, through a carbon price and a stabilisation goal, the right science and technology, and then to share that. I am sure that China and India want to grow sustainably, but they will not put at risk their determination to reduce the poverty of their population. That is a reasonable position, which is why the G8 summit in June will be so important.

Elliot Morley: This is a good outcome that demonstrates the value of full engagement with the European Union, and one of the EU's strengths. At last month's meeting of the Washington legislators forum, there was a real willingness among legislators from the G8 plus 5 to sign up to the idea of stabilisation goals and global carbon markets. Does the Prime Minister think that that will be reflected by the leaders of China, India and the US at the forthcoming G8 plus 5 meeting, because that will be an important way of building support for a proper outcome post-2012?

Tony Blair: First, may I pay tribute to the work that my right hon. Friend has done on this issue, especially at the recent meeting in Washington, in which he made an outstanding contribution, for which I thank him? Yes, that is precisely how we ensure that China and India come into this. As I was saying to the leader of the Liberal Democrats, China and India want to play a big part and we have to encourage them. However, they will not take action unless America is part of this—as is the case vice versa. We will not get further than this at the G8 summit in June, but if we get that far, agreeing the principles of a new deal will be a very big achievement. Part of that will be the technology transfer that those countries crave.

Malcolm Rifkind: Was the Prime Minister personally involved in the drafting of the presidency conclusion on Palestine, which says that the European Union would deal with a Palestinian Government who
	"adopts a platform reflecting the Quartet principles"?
	Does he accept that that is, in a characteristically European way, a fudge, and will he give a clear assurance that the British Government will not deal with Hamas as long as it continues to support suicide bombing and the complete destruction of the state of Israel—which is, indeed, what it reaffirmed in a statement this morning?

Tony Blair: The position certainly has not changed at all. All sorts of words are used in respect of the national unity Government, but they all amount to the same thing: that such a Government must be in line with the Quartet principles, which means that they must accept the right of Israel to exist, and that the way to pursue a settlement is through negotiation, not violence. That will remain our position. The issue for us is whether, in this national unity Government, it is possible to get Hamas to understand that we cannot support people who attempt to achieve their aims through terrorism and that we cannot, in particular, take forward negotiations on two states if Hamas is saying that one of those states does not have the right to exist. That is our position, it has been our position, and it will remain so.

Stuart Bell: The Prime Minister mentioned leadership in his statement. Is this not an example of the European Union showing world leadership before the G8 plus 5 and the United Nations conference of Kyoto protocol states in December? The Leader of the Opposition mentioned the European emissions trading scheme. Is that not the appropriate mechanism through which to ensure that, by 2020, we reach the 20 per cent. reduction target without penalising or interfering with our manufacturing industry?

Tony Blair: I entirely agree with my hon. Friend—that is exactly the way to do it. If the European trading scheme develops in the right way over time, it is perfectly possible that we can get other countries or states in the United States to join. For example, the state of California has not ruled out the possibility of joining the system at a later time, and given that it has the sixth or seventh largest economy in the world, that would be of huge benefit.

David Heathcoat-Amory: It is reported that the most important decision taken at the summit's Friday night dinner was to remove the word "constitution" from the European constitution. If the EU wants to earn a more important description as a democracy, will the Prime Minister insist that it respects the clear verdict on the substance of the constitution by the French and Dutch electors, who said no? Will he ensure that the European Council does not smuggle through bits of the constitution by changing its name? If he wants to put the matter beyond doubt, will he hold the promised referendum in this country, to give the people a final say?

Tony Blair: I am afraid that, not for the first time in our deliberations about European summits, the right hon. Gentleman has been somewhat misinformed. That was certainly not the purport of the dinner on Thursday night. We agreed that it was important that the Berlin declaration did not get tangled up with issues to do with the constitutional treaty, which will come up at the June summit. In respect of the French and Dutch no votes, I can assure the right hon. Gentleman that the European Union as a whole is well aware of the implications of those verdicts.

John McFall: May I congratulate the Prime Minister on the part that he played in securing an environmental agenda and agreement, but does he accept that a unilateral imposition of tax on fuel by the UK would make us a laughing stock, as airlines could import the oil from countries that do not pay the tax? Does he agree that a global agreement is necessary? I welcome the fact that aviation will be covered by the EU emissions trading scheme by 2011, but will the Prime Minister take it from me that there will be a bit of ducking and diving by the airlines when it comes to reaching a realistic price for carbon emissions, and will he assure colleagues and me that he will be firm in achieving that realistic price?

Tony Blair: My right hon. Friend is absolutely right. As I say, we have to strike a balance, which is why I think it is very important that we do not take measures that harm our own industry or our own consumers, but at the same time ensure that we play our full part. He is right again in his implication that it is through the trading system that we will be able to do most, because that is on a common basis.

Elfyn Llwyd: I welcome the statement as a positive step forward, and I welcome the reference to clean coal technology. The Prime Minister rightly said that much will depend on the wider international agreements that are reached through future debates. How well placed is Britain to take full advantage of clean coal technology and, importantly, to be able to transfer that technology to people in India and China?

Tony Blair: We can certainly play our part with the rest of Europe in doing that. There is a certain expertise in the technology in Britain, but it is found elsewhere in Europe and the world, too. The hon. Gentleman is right to imply that the single biggest benefit of developing the technology is the possibility of exporting it to India and China—and America as well, of course, which has huge reserves of coal. Clean coal technology could offer a wholly different future for our own coal industry.

Colin Challen: May I add my welcome for the Prime Minister's statement, and particularly for the introduction of a mandatory 20 per cent. cut in emissions by 2020? However, it follows behind our voluntary target of a 20 per cent. cut by 2010 by a whole decade. Does my right hon. Friend detect any enthusiasm among other European states for voluntary cuts above the baseline—and it should be considered a baseline—of the mandatory target?

Tony Blair: I think we should take it stage by stage. The targets are very challenging for the European Union; there is no doubt about that at all. The renewable energy target is particularly challenging, which is why I think it is just as well that we are able to take account of different member states' energy mixes. My hon. Friend is right that once things really get under way, particularly if the European emissions trading system incentivises business and industry to do more, all the evidence is that people can be more bold and more radical than hitherto they thought they could be. The argument has already changed dramatically in the past few years, and I think that it will do so further in the next few years.

Edward Leigh: It makes sense to cut CO2 emissions, but has the Prime Minister had the chance to watch or be briefed on last Thursday's Channel 4 "Dispatches" programme? There are eminent scientists who dispute the orthodoxy on the causes of global warming; one may or may not agree with them, but their voices are out there. Does the Prime Minister agree that before we take steps that might damage economic growth in the third world, where poverty is the main problem, we should ensure, on an ongoing basis, either nationally, or through the Commission or the EU, that all scientists are given a voice, so that we take the right decisions?

Tony Blair: I have not been the greatest watcher of Channel 4's "Dispatches", for pretty obvious reasons, over the years. The hon. Gentleman is right: there are people who still dispute the science on climate change, but there is a problem. In most respects, I am a fan of people who are prepared to be iconoclastic and say things that are unpopular, even if the conventional wisdom is all one way, so I do not dispute his right to raise those issues at all. However, the fact is that all people who advise us say that the science is becoming increasingly clear, not less so, and the fact is that, should we not take action, and it turns out that the warnings of climate change are right, the implications are enormous. Even on a precautionary principle, it is as well to take avoiding action now. The debate will carry on among scientists, but as I have watched it develop in the past few years, the body of opinion has moved very solidly in favour of this threat being real. Therefore, the implications of it being real are so enormous that we would be foolish not to sit down and take action now.

Adrian Bailey: May I welcome my right hon. Friend's statement, which is of potentially huge significance and will be enormously welcomed by British manufacturing industry? Does he agree that crucial to its success are, first, mechanisms to ensure that European countries liberalise their energy markets; secondly, that the Commission is robust in upholding its national allocation plans for emissions trading; and, thirdly, that the Commission consider a sectoral approach to stop certain industries, such as the energy supply industry, hoovering up carbon credits and passing on the extra cost to British manufacturing?

Tony Blair: My hon. Friend makes some very wise points. The important thing is that the Commission takes, as he says, the necessary robust action on energy liberalisation, and makes sure that the emissions trading scheme works properly. In that regard, another interesting change has taken place. British attitudes towards the European Commission have not always been clothed in the utmost warmth—indeed we have often regarded the Commission in Brussels as the problem. Interestingly, this President of the Commission—we played a part in ensuring that he became President—has provided us with an opportunity on regulation, liberalisation and issues such as climate change, as he has the necessary tough appreciation of what is right for Europe's competitiveness, and is prepared, too, to take a long-term view on issues such as climate change. We need a robust European Commission to complete the agenda.

Ian Taylor: I agree with the Prime Minister and with the Leader of the Opposition that the summit shows that British interests can work in harmony with those of the European Union, which is another justification for our being fully integrated into the Union. I agree, too, with a remark that the Prime Minister just made about the Commission. It is vital, particularly in competition policy, that energy distribution industries are opened up, which means that the Commission must take tough action that is backed by the European Court. During the summit, did the Prime Minister discuss energy security? There are increasingly worrying signs that the Russians are trying to interfere with our key pipeline—both the distribution networks through the pipeline and the source of the oil itself. That sort of Russian politics is becoming quite worrying for the European Union.

Tony Blair: It is interesting that the Baltic states—Estonia, Lithuania and Latvia—are coming together to build a nuclear power station to improve the security of their energy supply. Although it was not the main subject at the summit, there was a great deal of concern and discussion about energy security. The hon. Gentleman's point about the European Commission is right and true, which is why Britain has an unparalleled opportunity in Europe. First, we have an enlarged European Union—again, the hon. Gentleman's and then our Government fought for that—so that alliances in Europe are far more fluid than they were before. Secondly, the European Commission is increasingly on all fours with the agenda that we want. Both those things give us big opportunities in Europe.

David Winnick: I wish to take up a comment that my right hon. Friend made a few moments ago. Although all Palestinian factions should recognise the existence of Israel's pre-1967 borders, is he aware that while the European Council was meeting many of us saw on television Israeli troops using Palestinian children as human shields, clearly in defiance of international law? What protest will be made by the European Council, the British Government and, I hope, the United States Government about what the Israelis are doing and what we have seen on television, which is totally unacceptable?

Tony Blair: The only way through is to get negotiations going between the Israelis and the Palestinians. I hope that the meetings that are already taking place between Prime Minister Olmert and President Abbas of the Palestinian Authority continue. I know that the US Secretary of State, Condi Rice, is to go back to the region shortly— [Interruption.] I understand what my hon. Friend says, but the only thing that will put a stop to the grief and hardship on both sides is a negotiated settlement.

Michael Jack: I warmly welcome the environmental conclusions of the Council. In his discussions with Angela Merkel, did the Prime Minister learn of the fact that in Germany some 200,000 people are employed in the renewable energies industry, largely owing to the much more advantageous terms on which Germans who install renewable systems have their electricity purchased? What plans has he to reconsider how electricity is purchased in this country, to make the installation of renewable technology much more attractive?

Tony Blair: The point that the right hon. Gentleman makes is right. People in Germany who generate energy through microgeneration are able to feed any surplus energy back into the system. These matters are all under active consideration, and he may learn more about this in the next few days.

Keith Vaz: I join the Leader of the Opposition in congratulating my right hon. Friend on achieving his objectives at the Council. The conclusions refer to progress with the Lisbon agenda. Is he confident that the target of 7 million jobs to be created in the next year in the EU will be met? Given his leadership in this area over the past seven years, since Lisbon began, what steps will he take to ensure that our European partners pursue that agenda as vigorously as Great Britain?

Tony Blair: Europe has generated millions more jobs in the past few years, but we still have levels of unemployment that are far too high. We also need a labour market that is more geared to employability, rather than a more old-fashioned view of the social dimension. It depends to a great extent on the Commission being allowed, and being given support by member states, to take measures on liberalising the European market and on making sure that we support our work force through training, education and skills—active labour market policies, rather than old-style regulation. That is the agenda that we will push. The good news is that the Commission is on the same track. We need to ensure that all member states are on the same track.

David Howarth: Will not the apparent decision to allow member states to count investment in nuclear power against their renewable energy targets have the effect that the renewable industries have long feared—that encouraging investment in nuclear power will undermine investment in the truly renewable industries?

Tony Blair: That it not what it does. The overall target for renewable energy is 20 per cent. for the whole of the European Union. It is in the allocation of that 20 per cent. that account can be taken of the energy mix of individual countries. The 20 per cent. target is at the bold end of the spectrum. We will face considerable difficulties in ensuring that all the European Union meets that target. If the energy mix could not take account of the reliance of the UK, France and other countries on nuclear power, it is hard to see how that could be fairly done. So that is necessary to protect the British interest, and it gives Europe more flexibility in how we meet that target. It does not change the target itself.

Chris Bryant: Further to the point about the Russian Federation, considering Europe's heavy dependence on Russia for much of its energy, is it not vital that we get Russia to sign up to the CO2 emissions action as well, and that we try to persuade Russia to adopt a more secure path in the liberalisation of its market so that people can have confidence in the investment that they make in Russia?

Tony Blair: That would be sensible for us and, dare I say it, for the Russian Federation as well, but it is a decision that it has to take. For our country and other European countries, the concept of the common European energy policy has come about in part because people want the strength of countries acting together when we negotiate with those who are going to supply a large part of our energy needs. It is very sensible for us to do that. I also think that if we can get the right type of relationship with Russia, it will make a big difference to our security and, as my hon. Friend rightly implies, to its competitiveness.

Andrew Miller: I am sure that my right hon. Friend will agree that the summit will have a significant impact on companies that are considering investing in energy-saving technologies and in particular in developing new businesses. At a recent awards ceremony, sponsored by Shell, that I was privileged to attend on this very subject, a number of companies that were the winners displayed products that were near to market and at-market, which could significantly help this country. He mentioned the building schools for the future programme. Will he ensure that such companies are given support in public sector procurement, because it is a way in which the Government can give a lead?

Tony Blair: My hon. Friend is right to say that. We must ensure that we give proper support to those companies that have imaginative and near-to-market proposals. The important thing for Governments is not to try to pick the technologies, but to incentivise the development of the technologies. The market will do the rest.

Roger Gale: Did the European Council discuss the proscription of the People's Mujaheddin of Iran? Will the Prime Minister explain his Government's reluctance to accept the findings of the European Court of First Instance in that matter?

Tony Blair: We did not discuss it. I shall write to the hon. Gentleman about the Government's position.

Bernard Jenkin: How do the Government propose to measure the Commission's action programme for reducing administrative burdens in the EU and the success of the programme? It is easy enough to count directives or regulations merged or scrapped, but what is the cost of European regulation on British business? Do the Government propose to publish figures showing that the cost for that will start to decline instead of carrying on increasing?

Tony Blair: The Commission has its own means now of assessing and, I think, publishing—I shall check that in case I am wrong—the administrative costs of legislation. The idea is to reduce the percentage of those costs by 25 per cent. That is its purpose and it is similar to what we have proposed in the UK. The whole point is that administrative costs should be measurable. I agree that it is a big change in what the European Union has done up to now, but I would think and hope that the hon. Gentleman welcomed that.

Adam Afriyie: Given that the Prime Minister has told us that aviation is supposed to enter the emissions trading scheme in 2011, will he or his Chancellor be making proposals to offset their massive increase in air passenger duty against that scheme?

Tony Blair: I think that I am right in saying that the increase in air passenger duty will cost significantly less, certainly for most domestic travel, than VAT on airline fuel or the proposals of the Leader of the Opposition. The most important thing is that whatever we do, we do it Europe-wide. I am not saying that we cannot do certain things domestically, but we must be careful to get the balance right, as I said. I think that those proposals do not.

Bob Spink: What action are the Prime Minister and Europe taking to ensure that the global price for carbon will enable the carbon trading policies to work effectively?

Tony Blair: The way in which the emissions trading system works is to set a cap on emissions for each individual country and trade the permits within that system. Basically, the price is set through the cap. Progressively, we need to lower the cap so that the carbon price is transparent and the necessary incentive is given for business and industry to develop the science and technology to deal with it.
	Incidentally, I agree that we have to be careful in the way in which permits are traded, but the single most important thing is to be able, progressively over time, to reduce that cap. If we could get a situation whereby there were other regional emission trading systems and they at some point linked up, that would probably be the best route to a global carbon trading system, which is, in the end, what we need.

Greg Hands: The President of the European Commission, José Manuel Barroso, told  Der Spiegel on Friday that the EU has no formal competency on energy policies, which it would have only after the passing of the EU constitution. On getting action on climate change, he said:
	"With the constitution, it would be much easier".
	Does the Prime Minister agree that he needs to send a message to Mr. Barroso that we do not need to wait for structural change in the EU to get strong collective action on both energy security and climate change?

Tony Blair: To be fair, President Barroso is taking action. He is right in saying that energy was part of the constitutional treaty. Irrespective of what is in the treaty, we can take common action at a European level, which is what we have agreed to do. I think that he has shown commendable leadership on that issue.

Robert Goodwill: Does the Prime Minister agree that the effectiveness of the existing EU emissions trading scheme has been undermined by the over-generous allocation of carbon credits to certain member states?

Tony Blair: That is probably true, but it is not very surprising at this stage. The scheme has just begun, and it is the first of its type in the world. Just as at a national level we have to be careful that we do not get so far out in front of the pack that we damage our own business and consumers, so at a European level we operate in a globally competitive economy. I think that I am right in saying that European emissions comprise 15 per cent. or possibly a little bit more of the total. In the end, the purpose of the European emissions trading system is, as it develops, to become more effective, which is why President Barroso is trying to set much more ambitious caps for 2008 to 2012. In time, we will bump up against a limit in Europe, unless we can draw in other countries. As the hon. Gentleman will know, it would be an understatement to say that the leaders of European industry are concerned about how the European emissions trading system may develop. We need to take the process in stages. It is important that we achieve an agreement at the G8 plus 5 to the principle of a stabilisation goal and of a global carbon trading system to make the process move forward.

John Bercow: Given that Russia's increasing authoritarianism and truly lamentable human rights record should be of continuing concern to all EU member states and that regional instability threatens to hinder progress on a wide range of issues from organised crime to nuclear proliferation, will the Prime Minister tell the House about whatever discussions took place at the summit on the need to engage with Russia above and beyond energy matters?

Tony Blair: I cannot recall offhand particular discussions on that at the summit, but I think it a fair characterisation to say that it is a running theme of all European meetings at the moment. There is a desire to engage with Russia as a major partner for Europe, but there is also a great deal of wariness for the very reasons that the hon. Gentleman gives. One of the reasons countries around Europe are taking decisions on energy policy, such as some of the decisions that we have taken here, is the concern about that. I hope that Russia understands and realises that its best prospect of playing its full part in the international community, and certainly its best opportunity to be a strong economy, is if it plays by the same rules as everybody else in Europe and America, too. I assure the hon. Gentleman that at every opportunity we discuss the matter both with our allies and, in so far as we can, with the Russians. I think that developments in the next couple of years will be extremely important.

Henry Bellingham: Further to the question asked by the right hon. Member for Leicester, East (Keith Vaz), may I ask the Prime Minister again about the Lisbon agenda? How much discussion took place on the Lisbon agenda? Is it still his Government's intention to retain Britain's individual opt-out on the working time directive?

Tony Blair: We will not do anything that puts at risk our position on the working time directive. We do want a resolution of this, however, since, as the hon. Gentleman knows, we have real problems with the SIMAP and Jaeger judgments, which are costing our health service a very significant sum every year.
	Yes, there was a discussion about the Lisbon agenda, and it forms part of the conclusions. In the end, however, the best way of getting the Lisbon agenda taken forward is to support a strong European Commission. That may not be absolutely to the hon. Gentleman's liking, but it is the best way of doing it. The whole point about the single market is that what ultimately stands in the way of its completion is the various vested interests of the various member states and their industrial sectors. The only bulwark against that is the European Commission, which is why it is so important that we give full support to President Barroso and his agenda.

Points of Order

Julian Lewis: On a point of order, Mr. Speaker. I know that you are not responsible in any way for the quality of Departments' replies to written questions, but I believe that the named day procedure was put in place to limit the number of questions that we ask on a given day for written answer so that we would have a good chance of getting a decent answer to them. In mid-December, I tabled a series of very specific questions about the assassination of Georgi Markov in 1978, bearing in mind that next year the statute of limitations will run out for any possible prosecution of the alleged assassin, Francesco Gullino. I was given a holding answer on 19 December saying that a reply would be given as soon as possible, but I have had to wait until 8 March to receive the substantive answer, which reads:
	"The investigation into the death of Georgi Markov is a matter for the Commissioner of metropolitan police."—[ Official Report, 8 March 2007; Vol. 457, c. 2164W.]
	I could just as easily have been told that on 19 December and not have lost two and a half months. Is it not part of the deal that if the Department is going to give an answer such as that it should give it on the named day?

Mr. Speaker: I can take the blame for many things, but I am not responsible for the answers that Ministers give.

Michael Penning: On a point of order, Mr. Speaker. I wonder whether I can seek your advice. Some 1,400 of my constituents wrote to the Secretary of State for Health about their concerns about the closure of our local general hospital. On 1 February, the Minister of State, Department of Health, the hon. Member for Leigh (Andy Burnham), who is on the Front Bench, wrote to me assuring me that even though acute services would be closed, an independent sector treatment centre would be built in my constituency. Yet on Friday evening, the chief executive of my trust phoned to tell me that the ISTC was not going ahead and my constituents had been misled. How can we clarify such misleading statements from Ministers?

Mr. Speaker: It sounds to me as though the hon. Gentleman should apply for an Adjournment debate. I cannot make any promises, but sometimes the Speaker looks at local constituency matters favourably.

ESTIMATES DAY
	 — 
	[2nd Allotted Day]
	 — 
	SUPPLEMENTARY ESTIMATES, 2006-07

NHS Deficits

[Relevant documents: The First Report from the Health Committee, Session 2006-07, HC 73-I, National Health Service Deficits, and the Government Response thereto, Cm 7028; and the Department of Health Departmental Report 2006, Cm 6814.]
	 Motion made, and Question proposed,
	That, for the year ending with 31st March 2007, for expenditure by the Department of Health—
	(1) further resources, not exceeding £94,395,000, be authorised for use as set out in HC 293,
	(2) a further sum, not exceeding £1,000, be granted to Her Majesty out of the Consolidated Fund to meet the costs as so set out, and
	(3) limits as so set out be set on appropriations in aid.— [Huw Irranca-Davies.]

Kevin Barron: First, let me say how pleased I am that we have this opportunity to debate the Health Committee's report on national health service deficits and the Government's response. I thank the Liaison Committee and the scrutiny unit of the House of Commons for assisting us in this process. I thank members of the Health Committee, some of whom are in their places this afternoon. They have spent many weeks and months working on the report. I thank the secretariat and the special advisers who helped us to draw up the report, which we published before Christmas.
	I would also like to thank the Department of Health. It published not only the response to our report on 20 February, but, by coincidence, its own examination into deficits— [Interruption.]

Mr. Speaker: Order. An awful lot of private, loud conversations are taking place in the Chamber. That is unfair to the right hon. Gentleman.

Kevin Barron: The Department published a document to explain the national health service deficits. It was conducted by the chief economist of the Department's corporate analytical team. Coincidentally again, on the same day that the Government response to our report was published, they also published quarter three of the NHS returns for this financial year.
	I want to pick up some of the more serious points that we made in the report and consider the Government's response to them. Let me begin with the introduction in 2004-05 of resource accounting and budgeting. The Health Committee considered that in great detail and took evidence from the Audit Commission, which had also examined the change in accounting in NHS bodies. It and the Health Committee were critical of resource accounting and budgeting.
	I appreciate that the Minister of State, Department of Health, my hon. Friend the Member for Leigh (Andy Burnham) will doubtless speak about the matter at some length, but let me cite paragraph 25 of the Government response, which states:
	"In this context, the Department is looking seriously at the case for reversing the impact of past RAB deductions for NHS trusts for delivery of financial balance in 2006-07 and at the future application of the RAB regime for NHS trusts."
	Will my hon. Friend the Minister tell the House the Government's exact thinking on the matter? It worried the Committee, the Audit Commission and many parts of the NHS.

Andrew Lansley: The Select Committee sought the disapplication of resource accounting and budgeting to the NHS. For me—and, I suspect, for the Government—there is a good case for not applying it to NHS hospital trusts run as businesses, or, indeed, to NHS provider trusts. However, there is not a good case for not applying RAB to primary care trusts, which receive a given amount of public expenditure resources. They should live within the overall resource envelope.

Kevin Barron: As an individual, and not speaking on behalf of the Committee, I accept that all sectors of the NHS—primary or acute sector trusts—have the responsibility to the taxpayer to work within their budgets and their means. That has clearly been difficult for some of them in recent years because of the change to resource accounting and budgeting. The Committee and the Government's analytical team have considered that in recent months.

Andrew Lansley: Let me make my point clear. All provider trusts in the NHS are businesses. In the course of their normal business, they may well incur deficits and losses on their income and expenditure account one year and surpluses in others. There may be legitimate reasons for that. However, a primary care trust, in its proper role as a commissioner of services, receives a given amount of resources and has a responsibility not to spend more than the resources that are voted to it through the House. The discipline of RAB should therefore apply to primary care trusts but not to businesses that are trying to provide services year on year.

Kevin Barron: We need to extend the debate. I shall say a little about what the Committee found in some health communities, which told us, "Last year, we were the overspenders and we were the acute sector, so we'll move it to the primary sector this year and they can be overspenders." That is an unhealthy state of affairs and I shall mention it briefly again later. We cannot say that RAB is all right for one sector of the NHS but not another.

Phil Willis: The hon. Member for South Cambridgeshire (Mr. Lansley), speaking from the Conservative Benches, raised a very important point. Does the Chairman of the Select Committee agree that there is an inherent contradiction between a primary care trust, which has a finite budget to manage, and foundation trusts within that PCT, which have a "payment by results", more open-ended agenda? There are two conflicting arrangements there, which are certainly not conducive to balancing the books.

Kevin Barron: At this stage, I would say to the hon. Gentleman that we looked at the issue of payment by results, but whether or not it is a distorting factor has not yet been finalised. If the hon. Gentleman reads the report in detail, he will find that the Government put their hands up in some respects and brought in some elements of payment by results and some tariffs that were clearly off the mark. Some changes were made earlier in this financial year to try to get them back to a more sensible balance.
	This has been and remains very much a moving picture. Once we start to make national health service expenditure transparent, as the Government have tried to do, all sorts of things are brought into play. That is not historical, but quite new in respect of payment by results. Other aspects, which I shall come on to in a few minutes if I can make some progress, have been more historical.

Michael Penning: rose—

Kevin Barron: I shall have to give way to the hon. Gentleman, who is a member of the Committee.

Michael Penning: Yes, I have the honour of being a member of the Committee of which the right hon. Gentleman is the Chairman. Before he moves on, I agree that everyone should stick within the allotted budgets, but the problem is that the formula in many areas is so bad for trusts that they cannot both stay within budget and produce the care that our constituents deserve.

Kevin Barron: The hon. Gentleman uses the phrase "so bad", which I am not sure I would use, but we tried to establish what it was in the formula that led to the problem. Indeed, that is what the Government's own analytical department has been trying to do. I will refer both to what we found—or, in that particular case, what was not found—and how the Government responded to it in their own report of 20 February.

Nicholas Soames: We all greatly respect how the right hon. Gentleman chairs the Select Committee. I have raised with him the serious problem of historic deficits where the Government order one trust to merge with another trust, which can often lead to a very substantial deficit that the newly created trust then finds it almost impossible to get out from under. The trust has no alternative but to deal with that. Does the right hon. Gentleman agree that the Government really need to find a more sympathetic understanding and a more coherent way to deal with those inherited deficits that does not cause such terrible difficulties later on in the trust's life?

Kevin Barron: The hon. Gentleman will see exactly what we tried to do in the report. We dealt with how to manage the situation where deficits, historical or otherwise, are a very high percentage of the turnover of one organisation while at the same time being fair to other organisations in the NHS and to the taxpayer. Basically, deficits are about overspending. Whether historical or not, they are overspend against the budgets allotted to each individual constituent part of the NHS.
	My own view—I have said it for many months now—is that that problem has to be addressed in the interest of the taxpayer and in the interest of the NHS. We cannot have all this extra money being invested only to find out that there is still overspending. Often we do not know exactly where the money has gone or whether it is improving productivity and so forth. Under those circumstances, these are big issues. I would not want to argue—neither did the Committee, to its good sense—that where there are massive overspends or deficits, we should not find some mechanism for dealing with them. It is up to the Government, who run the organisation, to find out how they can make people more responsible than they have been in health communities in the past where overspend has taken place.
	One of the biggest issues for me—I speak from a personal level—was how the Government decided this current financial year to take on the matter of the overspend or deficits by seeking to balance the books nationally by the end of the financial year. They sought to do so on the basis of top-slicing. It certainly hurt my health community when more than £7 million was withheld from the Rotherham primary care trust, but I am pleased to say that that came out of growth money rather than current services. If it were not for that, I would have been even stronger in my criticism of top-slicing, which was done to bring back some discipline.
	I have a question for my hon. Friend the Minister. Paragraph 26 of the Government's response to the Select Committee report states:
	"We agree that top-slicing of PCT allocations to create SHA reserves is a temporary expedient,"—
	the Committee agreed with that—
	"with 2006-07 contributions being returned to the originating organisations as soon as possible."
	According to the quarter three returns of the NHS finances that were published on 20 February, there is a suggestion that £300 million could be paid back from the top-slicing within the year in which the top-slicing has taken place. That is my understanding of the situation; if that is correct, will my hon. Friend tell me how that money will be paid back, and to which primary care trusts or NHS organisations?
	Ministers have already told us that, in many instances, top-slicing has taken place in areas where there are high levels of health inequality. Those are the last places in which we should be holding back national health service expenditure, not the first. The top-slicing took place as a percentage across the board in SHA communities. If that money is to be repaid within the year, how will that be brought about? In Yorkshire and the Humber, for example, will a percentage be given back to all the NHS trusts? I will not bore the House with the details, but if we look at the health inequalities in that area, we see that there is great diversity there, although there was no diversity involved in the top-slicing. Perhaps my hon. Friend can respond to that point at some stage.
	I should like to move on to the contingency plans. The Government had planned to set up what we called a buffer in relation to the present in-year problems. They said that it was not a buffer, but it related to the top-slicing. In paragraph 31 of their response to the Select Committee report, they state:
	"No additional resources would be provided by Government for these purposes.—"
	that is, for the purposes of dealing with the current overspend. Given that nowhere near all the deficits will be cleared by the end of this financial year, what action can we expect to be taken next year by SHAs? Will we see the repayment of the £300 million—if my analysis is correct—in this financial year, only for further top-slicing to take place in 2007-08? I would like my hon. Friend to answer that question as well.
	The lack of a failure strategy to deal with in-year problems was not acted on quickly, but the Government are now talking about the implementation of a formal failure strategy in response to our criticisms. Will my hon. Friend tell the House what the situation is, in that regard?
	The hon. Member for Hemel Hempstead (Mike Penning) mentioned the funding formula. The Committee took evidence from three professors for our report, and I think that we heard four different interpretations of the funding formula on that occasion. We were trying to determine whether the formula disadvantaged rural areas, and it would only be fair to say that that was denied by our witnesses. I note, however, that page 6 of the report that I mentioned earlier—which was placed on the website by the Department on 20 December—stated:
	"Since deficits are found to be more prevalent in rural areas, further investigation of the costs and organisational aspects of servicing rural populations is recommended."
	In the report, the Government say that the formula is being considered by the relevant committee. How long is it likely to be before we get an explanation or interpretation of whether the funding formula impacts negatively on rural areas?

Michael Penning: The individuals who gave evidence to the Select Committee were joined by the chief economist for the NHS, who said that the formula did have a detrimental effect on areas such as mine in Hemel Hempstead. In evidence on page 103 of the report, however, the Secretary of State said that the correlation was "very, very small", which is contradicted by her own Department's report.

Kevin Barron: The Department mentioned six areas in its executive summary in relation to the current deficits, and that is certainly one of them.
	My hon. Friend the Minister will be familiar with the cuts in education and training budgets. Given the overspend in certain areas, those seemed to be easy targets. Effectively, budgets are held by SHAs and are consequently easy to hold back in order to balance national budgets. The Government said, in paragraph 65 of their response:
	"Although...funding will not be ring fenced"—
	for which we had asked, because of the raids, so to speak, in the current financial year—
	"there will be a more robust service level agreement which will seek to ensure that SHA decisions on what training to fund and the level of commissions of training places required are made on the basis of long term workforce need."
	The Health Committee will, I hope, agree a report on work force planning later this week, and no doubt the House will debate the matter again. I would be interested, however, to know exactly what the Government mean by the phrase, "robust service level agreement".
	Cuts to vulnerable services were also criticised. Numerous witnesses suggested that mental health and public health expenditure were the easier targets in health care. Several organisations wrote to us to make that point. The Government effectively denied that in their response. They said:
	"However, improving financial management does not mean compromising services for patients. To ensure that these services are not compromised the Department of Health has asked SHAs to ensure that local changes to spending plans are equitable across the local health economy, and that NHS organisations providing mental health and learning disability services should not be asked to contribute more in savings or cost improvement plans than any other service".
	I accept that entirely as it is written, but none of the three services that I have mentioned has national targets set. When services do have national targets, the NHS believes that those must be met. Under those circumstances, it is right and proper to say that matters should be equitable, but do we have equity when there are national targets and when some areas of the national health service have had such problems recently?
	On the delay in recognising deficits, the analytical body said in its report that the NHS's inability to recognise the implications of changes in resource accounting and budgeting and therefore what was likely to happen in the particular year was one of the major problems.
	The Government responded, and I am pleased that they did. We had said:
	"We are surprised that it took so long for the unsustainable financial commitments which trusts were undertaking to be recognised."
	The Government's response was:
	"We have changed this financial focus, and, in the context of greater transparency, now encourage the NHS to plan towards achieving surpluses."
	That represents a big change in the culture of the national health service:
	I remember, many years ago when I was an Opposition health spokesman, reading Audit Commission reports showing that the priority of hospitals at this time of year was to spend their budgets immediately. If they did not do so, regardless of whether they needed the relevant equipment, the budget would be withheld from them in the following financial year. Has that changed? Rather than spending all its annual budget, can a part of the NHS—while not making a profit—keep some money that can be rolled over into the next financial year? That could help the NHS to plan for different departments.

Mark Pritchard: Recommendation 29 of the Select Committee report expresses concern about short-term answers to some of the financial problems faced by acute trusts in particular. Does the right hon. Gentleman feel that the transfer of access to brokerage on deficits from acute trusts to strategic health authorities was a positive or a detrimental step?

Kevin Barron: I think it was a positive step. The hon. Gentleman will find "Explaining NHS Deficits, 2003/04 — 2005/06" on a Department of Health website. I do not think it has been published yet, but it appeared on 20 February. As it explains, the main reason for the deficits is the fact that in 2003-04, strategic health authorities were told that they could no longer move capital into revenue accounts, as the NHS had done for decades. Capital expenditure budgets were easy targets, because they were not as obvious as revenue budgets. When the practice stopped, the whole issue of deficits was brought to light.
	I hope the House accepts that I am not being partisan when I say that that was a brave decision for any Government to make. Sir Humphrey would say "That was very brave, Minister." It brought the House, as well as the Government, into the debate on whether enough money was going into the system. In the past, SHAs had covered up overspend by ensuring that other parts of the NHS effectively underspent. It is possible that there was underspending in areas where there was more need—no doubt examples will be produced—but that was not the intention. The intention was to ensure that an NHS organisation's budget was the property of that organisation, to serve its health community. Until two years ago, that was not the case because of the brokerage that was taking place. I am very pleased that it has ended.

Bernard Jenkin: I am listening to the right hon. Gentleman's speech with interest, because he is describing many of the factors that have disrupted local health services in my constituency. Earlier, he suggested that primary care trusts should be able to run up their own reserves to cushion the impact of changes and new targets issued by the Government. Is that recommendation in the Select Committee report? I cannot find it. If it is not, would the right hon. Gentleman consider making such a recommendation to the Government? That really would be about financial independence for PCTs and others.

Kevin Barron: Let me read out the Government's response again:
	"We have changed this financial focus, and, in the context of greater transparency, now encourage the NHS to plan towards achieving surpluses."
	That is very plain, and very specific. It is in paragraph 80 of the Government's response. I think I know what the Government mean by it; all I want to know is whether organisations would lose any money that they did not spend in any one year. I do not think that that is necessarily wrong, but it is a major issue.
	Will the trust that has not been overspending—it might be spending up to the mark because it feels that it has to do so as the end of March is coming up—be able to save however many millions of pounds are involved and then take that into the next year with no consequences for the following year's expenditure? That is important.
	The Health Committee was very critical of what we call the failure of financial management inside the national health service. I am pleased that the Government have accepted that
	"within the highly complex NHS system, day-to-day financial management practice has not always been of a consistently high standard."
	Many of us agree with that.
	We also criticised the role of finance directors. Indeed, some NHS organisations—some with budgets of more than £200 million or £300 million per annum—did not have what would be called a finance director who is responsible to the board for the income and expenditure of the organisation. I am pleased that the Government have now said:
	"A national training programme for Strategic Financial Leadership is in the process of being set up and every organisation will be expected to support their Finance Director in attending this programme."
	However, the end of that statement is a little thin, so I ask how far we have got now in setting that up. If we are to avoid the situation that has arisen in the last few years—and probably decades—in the national health service of there being overspending which is hidden by this type of brokerage, it is important that people have confidence that their finance directors know exactly what is happening and what should be happening and that they are looking after the interests of both the taxpayer and the people who use the national health service.
	I shall not carry on much longer as I know that other Members wish to contribute. The whole issue of national health service deficits arose early last year, and question marks still hang over some aspects of it. I have posed a few questions this afternoon, to which I hope my hon. Friend the Minister will respond and I am sure that other Members will have other questions to ask. It is crucial that the taxpayer—and everybody else—knows exactly how their money is being spent inside the national health service.
	When the Health Committee comes to report later this year, we will have further thoughts on how we have ended up in our current situation in respect of at least one other area that we shall look at. I hope that Members agree that some progress has been made in the past few weeks in explaining the history of national health service deficits and in finding a mechanism for tackling the problems that some trusts face. Some parts of the national health service still face deep problems because of their amounts of overspend, regardless of whether that overspend is historical—they have inherited it—or they have created it themselves. The Government need to address these issues soon.

Sandra Gidley: I welcome the opportunity to discuss health service deficits. It is fair to put on record that nobody can deny the unprecedented levels of funding.  [Interruption.] No, my next word is not a "but" exactly: many people are asking some legitimate and serious questions. They want to know where all the money has gone; has some of it been wasted and, if there is so much money in the system, why do things not seem better?
	I accept the achievements gained, and I will let the Minister talk about them. However, because of the nature of the world, matters that cross the desks of Members of Parliament and therefore exercise our minds—and the minds of members of the public and the press—are those that are not going quite so well. At present, the sad reality is that it is thought that any reconfiguration—however well meant and however much it delivers for patients—is being done just because of the deficits. I find it hard to believe that the Government welcome that idea, because it makes their job that much harder. It is for that range of reasons that the Select Committee undertook to investigate those deficits. It was interesting, but, on occasions, quite hard to cope with the fact that we seemed to be undertaking an inquiry into work force planning at the same time. On numerous occasions, those matters seemed to be inextricably linked, because the lack of planning on staff numbers and wage decisions seemed to have contributed to the deficits.
	As the report's findings were explained comprehensively by the Chairman of the Committee, I will focus most of my comments on the Government's response to the report. It was clear when we undertook the inquiry that there was no single reason for the deficits. We felt that several factors were significant, including the funding formula, which has been mentioned, and we spent some considerable time getting our heads around resource accounting and budgeting. It was clear that aspects of central and local management were poor. Government initiatives, private finance initiatives and wage bills were determined centrally and, to an extent, imposed locally, but local implementation and the way in which different trusts tried to achieve targets probably contributed to the current situation.
	We had particular concerns about top-slicing, the cuts in education and training and the proposed contingency funds, but the Government's response to some of those concerns was a little disappointing. The Committee recommended a review of the—I am sorry, I muddled up my notes.

Michael Penning: Speak from the heart.

Sandra Gidley: I intend to. The Committee recommended a review of the funding formula. We took a host of evidence on that, but there was little agreement. The review is being undertaken by the Advisory Committee on Resource Allocation. It is useful to note that the change to practice-based commissioning might mean that we have to look at these matters a little differently. That was a positive response from the Government.
	The Liberal Democrats welcome the news that the market forces factor will also be considered. It is clear that the cost of providing services in rural areas is particularly high, as is the cost of providing services in the south of England. While no one would argue that the areas of highest deprivation do not require some extra funding, there is a case for ring-fencing some of that funding for public health needs, so that we reduce the cycle of deprivation that is sometimes perpetuated from one generation to the next. It is disappointing to analyse the spending of spearhead primary care trusts, because there is such huge variation in the amounts of their budgets that they allocate to public health. If we are to help some of those areas to achieve better health outcomes in the longer term, surely greater attention needs to be devoted to the amount of money spent on public health.

Stewart Jackson: Does the hon. Lady, like me, deprecate the fact that a significant number of PCTs across the country—this was found out under the Freedom of Information Act 2000—have significantly reduced, or even cut by 100 per cent., their sexual health education budgets to make up for deficits? Does she agree that that is a retrograde step?

Sandra Gidley: I agree with the hon. Gentleman. I will return to that issue later.
	When establishing a funding formula, nobody ever looks at how much it costs to deliver a similar service in different parts of the country. The costs in the south of England—the costs of living and accommodation—have an impact on what can be spent on front-line services. Many would agree that such costs are taken into account inadequately. It is no coincidence that the somewhat lengthy Government response that tried to explain NHS deficits mentioned that there was a triangular-shaped area in the south of England that was particularly prone to deficits in the latest financial year.

Neil Turner: The hon. Lady mentions the market forces factor and indicates that there are increased costs in the south-east. Although I accept that, that is taken into account in people's salaries, through the London weighting and south-east weighting.

Stewart Jackson: It isn't.

Neil Turner: Yes it is. People get paid that extra money. The market forces factor is not based on the closed economic cycle of the payments that are made to people in the national health service; it is based on private sector wages. It cannot be right that private sector wages in the south-east are used to decide money for hospitals, which are a public service. A nurse in the south-east gets paid exactly the same as a person in Wigan, with the London weighting factor added on, so why have a market forces factor that is based on private sector wages?

Sandra Gidley: I think that the hon. Gentleman is supporting my call for a review of the market forces factor.

Neil Turner: indicated assent.

Sandra Gidley: I am glad that the hon. Gentleman agrees. Services cost a different amount to deliver in different areas and some of the factors that influence how the calculations are made are clearly inappropriate for the model. To be fair, the Government have recognised that to a certain extent in their response, but they probably have not gone far enough.
	Resource accounting and budgeting has exercised minds greatly. It has effectively led to what is known as the double deficit problem. Calculations have shown that, as a result of RAB, the in-year deficit for 2005-06 was exaggerated by £117 million. The Government response seemed slightly confused. A little clarification might be helpful, although it may just have been me who was confused. On the one hand, the response appears to agree that
	"RAB is not a suitable accounting regime to use within the NHS."
	But on the other, it says:
	"As a cross Government system RAB will continue to apply to the Department of Health, and, as confirmed by the Audit Commission, it remains appropriate for primary care trusts."
	It would be helpful if the Minister said whether that it is still the case as we move towards practice-based commissioning. Most NHS managers that I speak to say that they want to work within their financial constraints and within budget. Some of them admit that that has been done poorly in the past. However, it is a bit like fighting with one hand tied behind one's back, because of the double whammy.
	One of the reasons given for not scrapping RAB is:
	"It needs to be demonstrated that NHS trusts have the financial discipline to operate outside the RAB regime and will respond appropriately to the incentives and disincentives created by cash controls similar to those applied to foundation trusts."
	That brings me to the problem of poor local management and poor financial management, which has bedevilled the NHS for far too long. When I worked in a retail environment, at the beginning of every week figures were scrutinised to see what was up and what was down. There was real attention to detail. Any trends involving overspending or something going wrong could be identified. The same is true for many businesses in the private sector. It was quite clear when the Committee took evidence from trusts that some managers did not have a clue. We interviewed some who had done well, and some who had done badly. The good ones clearly drilled down into the costs, and knew the financial situation at pretty much every stage. Their approach was more akin to that in the private sector. It was clear from taking evidence from those who experienced real problems that some of them simply did not have a clue from one month to the next about where the money was going and where it was coming from, or even whether all the income streams were going in the right direction. There seemed to be too few financial managers of the appropriate calibre. If we are to make the best use of NHS resources, it is important to get this right, so I fully endorse the comments of the Chairman of the Select Committee, the right hon. Member for Rother Valley (Mr. Barron).

Sadiq Khan: I endorse what the hon. Lady said. I was taken aback by the comments of the director of Kensington and Chelsea primary care trust in the report about lack of leadership and management control.
	May I tell the hon. Lady about St. George's hospital in Tooting? Until 2003-04, whenever it overspent, it would simply get extra money from the strategic health authority. In 2003-04, it was given £15 million as a non-recurrent payment to bail it out of its overspend. Since then, it has reduced a budget deficit of £21 million to £4.4 million this year. Next year, the deficit will be nil, and there may even be a surplus, so will the hon. Lady join me in welcoming the Government's attempts to ensure that trusts work within their budget rather than overspending and being frivolous in their expenditure?

Sandra Gidley: The hon. Gentleman has probably got himself a press release out of that. I was about to say that I welcome the recent emphasis on financial scrutiny, but the problem is that that has been so long in coming. People may have thought that there was plenty of money in the system, but that reorganisation of many PCTs and probably too little expertise to go round contributed to the problems. However, it would be churlish not to recognise that some attempts at financial scrutiny are being made.

Stewart Jackson: I thank the hon. Lady for being generous in accepting interventions. Does she agree that it ill behoves the Government to lecture trusts on financial propriety in terms of the skill mixes of their financial directors when the Secretary of State, questioned on 29 November, confirmed that the Government have no idea what the 230,000 administrative and clerical staff in the NHS do or what their contribution to the NHS is, because the data are not collected centrally? On that basis, how on earth can the Government lecture trusts?

Sandra Gidley: I shall come to that point later. There has been a problem with cascading from national level to strategic health authority level to trust level exactly what is required at each level, and I will elaborate slightly on it later.
	According to the report on the third quarter financial returns, the aim is to achieve recurrent monthly run-rate balance by the end of the financial year, so it is disappointing to learn that 17 trusts are still not in a position to deliver it. Can the Minister say what else is being done to help those trusts? Although turnaround teams have been sent into some areas at considerable cost, it seems that some trusts have specific problems that are still not being resolved if they cannot balance their books from one month to the next.
	My next point is about strategic health authorities. At the last election, our policy was to scrap them, and it seems to have been well justified. What are strategic health authorities for? Let us consider the simple subject of staffing numbers. The Government had a NHS plan. It would have been fairly obvious to subdivide that into different areas so that each SHA would know the numbers of staff who should be taken on. It could then scrutinise the PCTs—given that the bodies were supposed to be strategic, I understood that they were supposed to scrutinise the PCTs. Instead, there was an absolute explosion in staff, with some trusts taking on staff whom they could not afford—the Committee heard evidence to that effect. In many cases, those staff were taken on simply to address a short-term problem or target. Nobody but nobody appeared to have an overview of the system, and no one put the brakes on before it ran completely out of control. We are where we are today as a result.
	There have been national problems with the implementation of some policies. No hon. Member would deny any member of staff a pay increase or a decent wage. The Government reviewed the pay of health service staff through "Agenda for Change". They also introduced the GP contract—it has become known as the "controversial" GP contract—and the consultant contract. Each of those went over budget by a considerable amount. "Agenda for Change" cost £220 million more than was expected. The GP contract cost £250 million and the consultant contract cost £90 million. The projected figures for 2006-07 suggest that "Agenda for Change" will cost an additional £394 million more than what was expected, while the consultant contract will cost £48 million. Again, it is strange that there was insufficient financial scrutiny at the heart of the Government to make the budgets more reflective of the reality.
	Let me outline some particular concerns. The top-slicing of the budgets of PCTs and other trusts has been somewhat controversial. The simple fact remains that it has pushed some trusts into deficit. According to the third quarter financial review, 35 per cent. of organisations are forecasting deficits, but that figure would be only 24 per cent. if the impact of top-slicing and the previous year's deficit could be ignored. The process seems to be a more formalised way of moving resources around the system than the old-fashioned approach, which the right hon. Member for Rother Valley mentioned, under which who should take the deficit each year was determined by Buggins's turn.
	I have a further concern about education and training. When the Secretary of State was questioned by the Committee about the raiding of the training budgets, she said:
	"I am very reluctant to go down the ring fencing route."
	However, doctors who are halfway through their training cannot access courses and the intakes of schools of nursing have been drastically reduced. That has a long-term effect. That approach might seem like a simple one-year solution, but one cannot expect schools of nursing and midwifery to reduce the numbers on their courses by a third or a half in one year and then revert to the previous position a year later. It is not fair to expect a single organisation to deliver in such a way.
	The Secretary of State did not appear to have an answer to the situation, although she referred repeatedly to difficult decisions. When the hon. Member for Staffordshire, Moorlands (Charlotte Atkins) said:
	"Let us make sure that stealing money from the training budget does not become habit forming",
	the right hon. Lady said, "I would endorse that." However, it is sad that she does not appear to want to do anything positive and concrete to try to ensure that such a situation does not arise in the future.
	The right hon. Member for Rother Valley talked about vulnerable groups. Paragraph 76 of the Government's response is a little helpful because it says:
	"improving financial management does not mean compromising services to patients. To ensure that these services are not compromised the Department of Health has asked SHAs to ensure that local changes to spending plans are equitable across the local health economy, and that NHS organisations providing mental health and learning disability services should not be asked to contribute more in savings or cost improvement plans than any other service, unless the mental health or learning disability services contributed to the deficit."
	That is all very well, but it only covers the issues of mental health and learning difficulties. As the hon. Member for Peterborough (Mr. Jackson) said, other services have been cut dramatically, too.
	The Terrence Higgins Trust has undertaken research that shows that much of the money earmarked for sexual health services has not reached its target destination. The problem, of course, is that not many Members of Parliament have people queuing up, or knocking on their door, to make a surgery appointment because they cannot get an appointment at the local sexual health services clinic. It does not happen; it is not something that people really want their MP to know about. Sexual health services are an easy target, and the Government should do more to ensure that the money for those services stays where it is. Removing that money is a short-term, unhelpful solution, because if people cannot access those services, they will carry on spreading disease, and we will end up with a bigger problem. Is that really what the Government want?

Phil Willis: One group of people who are queuing up at the surgeries of every right hon. and hon. Member in the Chamber are those with concerns about NHS dentistry. Before my local primary care trust was absorbed into a larger, sub-regional NHS primary care trust, it had some £10 million allocated to dentistry-related activity, yet 10,000 people in my constituency are on a waiting list for NHS dentistry, because all that money has been siphoned off and sent somewhere else to try to limit deficits. Money is transferred between organisations so that we can try to make sure that we mask the problems, and that has a huge effect.  [Interruption.] The hon. Member for Newcastle-under-Lyme (Paul Farrelly) says that the money is ring-fenced, but the reality is that it is not, because it is going elsewhere.

Sandra Gidley: Clearly, my hon. Friend feels passionately about the issue. When the contract was negotiated, there was an automatic 5 per cent. reduction in activity, and that contributed to the problem. It is difficult to understand how the Government are improving access to NHS dentistry when they have reduced the dental activity for which they are paying by 5 per cent. Clearly maths has changed since I was at school.

Paul Farrelly: Is it the hon. Lady's understanding, as it is mine, that the money for dentistry is ring-fenced and cannot be spent elsewhere?

Sandra Gidley: The point that I was making was that the pot of money had been reduced. There are cases of people trying to get a dental appointment but being unable to do so because the PCT has run out of money and no extra funding is available.
	I shall bring my remarks to a close so that other Members may speak. I welcome the improved attention to detail with regard to NHS finance. It is long overdue, but sadly it comes at a price; there have been hospital closures, reductions in service and redundancies for people who have worked long and hard to deliver some of the Government's improvements. Those people have a bitter pill to swallow.

Charlotte Atkins: The Government have invested unprecedented levels of funding in the NHS since 1997. Funding will have trebled by the end of the coming financial year, but in times of such plenty, the money is sometimes not invested as wisely as it should be. Certainly, there have been significant improvements in patient care, there is improved access to health services, and waiting lists are no longer the issue that they were back in 1997, but it is vital that all NHS organisations look carefully at the way in which they provide services to patients to ensure that they are delivering the best possible value for money. For instance, it often does not make sense to send patients to accident and emergency, as better management of their condition at home would save money—going to A and E costs hundreds of pounds—and provide much better care and outcomes for them.
	It has certainly been a difficult two years for the health economy of north Staffordshire, where my constituency is located. The Secretary of State frequently says that overspending is concentrated in the healthier and wealthier parts of the country, but that is not the case in north Staffordshire. We may be the exception that proves the rule, because north Staffordshire has been historically underfunded. That issue must be examined urgently, although I recognise that the historical underfunding is not the only problem that north Staffordshire faces. We saw great headlines about 1,000 redundancies at the University hospital of North Staffordshire, and stories about the way in which that would devastate the local economy. I checked the figures today, and the reality is somewhat different. The figures are, in fact, 150 redundancies, of which 45 are compulsory—that is a little bit different from the 1,000 redundancies that were headlined in the local paper.

Sadiq Khan: Is my hon. Friend surprised to hear that last year a political party scared local communities about the number of redundancies, yet in the entire financial year, only four redundancies were made?

Charlotte Atkins: That would not surprise me at all, because as I said, only 45 of those 150 redundancies were compulsory. Eight nurses were made compulsorily redundant—other nurses took voluntary redundancy. However, I do not wish to underplay the seriousness of the situation. A number of nurses who, traditionally, could expect to be employed by the local hospital, could not secure jobs. Now the local hospital is taking more nurses from Keele university, but many nurses have decided, because they have had offers, to go to Australia. That might be a fantastic experience—I am not suggesting otherwise—but the situation has led to some soul searching in the area.
	North Staffordshire is an area of low skills, and we cannot afford to lose that valuable skills base. However, what worries me most is that clear mismanagement at the hospital was not picked up. It is accountable to the strategic health authority, but to whom is the strategic health authority accountable? It is responsible for the performance management of trusts in its area, and it seems that it was asleep on the job. All the signs were there. The chief executive announced that he was leaving his job 13 months before he was due to go, but in all that time the hospital did not manage to find an adequate and effective replacement.
	The report by the Select Committee on Health found that there is no failure strategy in the NHS. There should have been a strategy that kicked in at that point, and people should have said, "Hold on, there are alarm bells sounding here—we must take this in hand." When the scale of the problem was finally revealed, members of the hospital's management board resigned en masse. A new chief executive, Antony Sumara, was brought in, who made a very good job of sorting out the mess. He made much better use of theatres and day surgery. It is a sprawling hospital on three separate sites, and he rationalised activities on different sites to ensure that it worked more efficiently. However, even he could not do everything, because the hospital buildings are up to 150 years old, so there was a big challenge. We hoped that he would stay put after his year's contract expired, and there certainly were suggestions that he would do so. But that has not happened. He was obviously headhunted to go elsewhere.
	We now have an acting chief executive, who I am sure is doing all she can, but I do not know whether the management of the hospital is getting the support that it needs. Its task is not just to manage a dilapidated hospital. We are to have significant and very welcome investment in a new maternity and oncology block that is due to open in two years. It represents an investment of £71 million from the Department of Health. At the same time, the plans for building a new PFI hospital are well advanced. There are several balls in the air, and the acting chief executive may not be getting the support that she deserves. Because of past performance, I have no great faith in the strategic health authority to supply that support.
	A real worry for everybody, especially patients, is the fact that infection rates remain stubbornly high. I know that much work has been done to reduce infection rates and meet Government targets, but I wonder whether the failure to get those rates down is a symptom of a wider problem. I hope not. When I talk to my constituents about their experience in the NHS, particularly in that hospital, by and large I get very good reports. It is only people who have not had recent experience of the NHS who say it is a shambles. However, experience in the hospital can vary from ward to ward. When my own daughter was in that hospital, her experience varied from ward to ward. She saw quite a few different wards, sadly.
	The primary care trust in my area is doing much better. We merged two primary care trusts, and I am grateful to Ministers for overruling the strategic health authority and supporting local people in our fight for a local PCT. The record of that PCT has justified Ministers' confidence in it. It is brilliantly led by the chief executive, Tony Bruce. As a result, the PCT is expected to be in balance this year, while achieving all the Government's expectations and ambitions. It would have been in surplus if it had not been top-sliced. As Tony Bruce told me the other day, the next two years are crucial, not just because NHS finances will be tighter, but because we have to make the right investment decisions now to ensure that we improve the lives and reduce the dependency of patients.

Andy Burnham: I have been listening closely to my hon. Friend's remarks. I recognise that the trust has been dealing with problems that have built up over many years, but does she agree that the announcement in the summer of last year—in the present financial year—that the PFI scheme for the trust would go ahead will give the trust confidence about the future? One of the problems has been that services have been provided over too many sites, often in poor and outdated accommodation.

Charlotte Atkins: Absolutely. The decision to ensure that the PFI hospital went ahead in a slightly smaller form was sensible, because we could have ended up with a white elephant—a huge hospital that would not have been fit for purpose in the 21st century because so many good things are going on in the local PCT area. We are sending far fewer people to hospital. Central out-patients has had a reduction of 20 per cent. in GP referrals because of the work that GPs and PCTs are doing locally to prevent the admission of patients to hospital.
	The work that is being done locally to make sure that patients are less dependent and do not end up in the acute sector is to be praised, but there must be consistency. My local PCT, the North Staffordshire primary care trust, is doing a fantastic job in that respect, but I am not convinced that that is happening countrywide. We must resolve those issues. If we do not, the increasingly elderly population will mean that we find ourselves in another crisis.
	The Department of Health cannot micro-manage the NHS; it has to be down to local organisations to do that. I am pleased that PCTs and trusts now have to achieve financial balance. The need to balance the books has driven much of the good change that we have seen. It has been necessary to drive down costs and deliver value for money, but in my area that has not been at the cost of patient care—in fact, it has improved patient care. We have introduced community matrons; I think that there was a financial incentive to do that, in the context of reducing acute admissions. We also have deep-vein thrombosis testing locally in Leek, the prevention of falls programme—again expertly led at the local Leek hospital—and PhysioDirect, which allows physiotherapists to treat people without a doctor's appointment. All those services have ensured that care is delivered locally, where people want it, and not in the acute sector.
	I very much welcome the transparency that has come with the tightening of the NHS financial regime. In the past, we had constant rumours about how Staffordshire had lent vast sums of money to, say, Shropshire, but it was never clear on what basis that was done and whether interest rates were paid; I do not think that they were. We were never really informed of what was going on. Now the financial position of each organisation is known. Many PCTs resent the top-slicing of their allocations, but I hope that that is only a short-term measure, and that PCTs will be able to manage their local budgets appropriately and not have to shore up the strategic health authority balances.
	The Select Committee suggested that some deficits were down to the growth in staff costs. To some extent, that was a result of pay rises and GP and consultant contracts, but it was also a result of the vast increase in the number of staff. I have no particular difficulty with GPs being paid more, as long as they deliver more for patients. It cannot be right for doctors to claim payments for access to their services, in terms of appointments, when some are clearly not doing that. It is important for PCTs to police the contracts properly, so that where doctors are getting more money, they deliver the services well. Payments must bring results, and that has to be the case at every level, including the GP level.
	I am concerned about the decision to stage the nurses' pay award. The independent nurses pay review body has done a fantastic job for nurses ever since it was set up many years ago. By considering the evidence from the unions, employers and Department of Health, it bases an award on the careful consideration of the facts. The review body came up with a 2.5 per cent. settlement. It was not generous, but it was fair. No matter how we dress it up, however, staging the award means that the pay award has been reduced by 0.6 per cent.—a cut that many nurses cannot afford if they are trying to get on the property ladder or raise a family. In the Department's response to the Select Committee's report, it says that staff costs are not a main reason for deficits. I cannot understand, therefore, why we are paring down the nurses award.
	I am particularly disappointed with the nurses' pay award, because nurses have been through a lot. Even though there have not been a large number of nurse redundancies in my patch, there has been a great deal of anxiety among nurses about getting local jobs.

Sandra Gidley: All hon. Members will have been bombarded by e-mails from nurses who naturally feel aggrieved by the pay award. Will the hon. Lady accept that the vast majority of nurses provide unpaid work, because they are not clock-watchers who go home immediately at the end of their shifts, and they work more hours than they are paid for? Does she regret the moves in some areas of the country to persuade nurses to work for an hour a week for no pay?

Charlotte Atkins: As a Unison member and someone who used to write evidence for the pay review body, I would not encourage nurses to work an hour unpaid. Nurses need to ensure that they are not too tired to do the job, and they already face enough pressure not only in the workplace, but, because many of them are women, family pressure and other extra responsibilities. Given that we have an expert pay review body, it should deliver the pay award and the Government should accept it in full.
	I appreciate that "Agenda for Change" has delivered fantastic opportunities for nurses in terms not only of pay, but of promotion prospects and of the chance to work in different areas. The whole role of nurses has vastly expanded, which has been encouraged by "Agenda for Change". The addition of 85,000 nurses to the NHS since 1997 has had a huge impact on patient care. From talking to my constituents, I know how much they value the work of nurses not only in the hospital but in the community. I certainly want to see the pay award honoured in full, and I hope that this will be the last time that it is staged.
	Lastly, I want to discuss training, on which, as the hon. Member for Romsey (Sandra Gidley) has said, I have questioned the Secretary of State. I feel very strongly about taking money out of the training budget, which is the seed corn of the NHS. That is not acceptable. It may be an easy option to raid the training budget, but it will have an adverse effect on staff morale, and in particular, on development. Given that a major reason for the deficits is a lack of management expertise at all sorts of levels within the NHS, it is vital that we spend more on training, not less. I asked the Secretary of State whether she would ring-fence the training budget. She did not want to do so, but I suggested that it should be controlled by a body such as the Higher Education Funding Council, which would prevent the strategic health authorities from raiding it. I would certainly welcome a more robust regime, and we must not allow the easy option of raiding training budgets to be used again.
	We now have a far more transparent system of NHS finances, but I still think that we lack sufficient management expertise in some areas. There appears to be a huge variation in quality, and we must find some way to ensure that the best-quality managers bring on the rest. From the evidence that we took in the Health Committee, it is clear that some managers are definitely getting it right and that others are definitely getting it wrong; unfortunately, north Staffordshire was one of the areas where management got it wrong. The situation needs to be urgently addressed, and if we do not address it, I fear that we will return to where we were a couple of years ago.

Simon Burns: Let me start on a positive note by thanking the Minister for the tremendous work that he did over a considerable time at the back end of last year and early this year to help to ensure that Broomfield hospital private finance initiative scheme moved successfully to a positive conclusion. I am extremely grateful, as are my constituents, to him and to his right hon. Friend the Prime Minister for all the work that they did to help to achieve that.
	I say that because it is relevant to what I want to say about Mid Essex Hospital Services NHS Trust and Mid Essex—formerly Chelmsford—primary care trust, which are both in deficit with a turnaround team trying to sort them out. I should like to pick up some of the points in the Health Committee's report warning against short-term remedies to try to solve longer-term problems. Mid Essex PCT has a deficit of what was thought to be about £11 million but is in fact somewhat more than that, and Mid Essex Hospital Services NHS Trust has a deficit of £13 million. They are both trying to meet the Government's requirements over the last financial year and for the forthcoming financial year and are having to take some tough decisions to break even and fit Department of Health requirements.
	The problem is that short-term decisions are being taken to reduce deficits. In the case of the PCT, for example, there is the closure of the only intermediate care wards at St. John's hospital, which were brought in by the Government five years ago with a special grant to help to overcome the problem of delayed discharges at Broomfield hospital. I suspect that in the coming months the closure of those two wards will have the knock-on effect of increasing the pressures and problems of delayed discharges, so it is a false economy.
	In both organisations, there have been redundancies, most of which have been voluntary or achieved through not replacing unfilled posts. Again, that has a knock-on effect in causing problems for existing staff who have to do extra work under extra pressure. On top of that, 50 nurses are being made compulsorily redundant. During questions before Christmas, the Minister gave the figure of 20 or 22 compulsory redundancies, but by the end of this financial year it will have increased to 50. Those are not long-term realistic views but short-term decisions to meet an immediate problem, and the adverse knock-on effect will not be helpful for the hospitals concerned.
	I should like to make a special plea on behalf of Broomfield hospital, which I visited last Friday. I went to see an ophthalmic surgeon who is extremely concerned about the Government's proposal to create three independent sector treatment centres in Essex—in Southend, Basildon and Braintree, about eight miles from Broomfield hospital. If that decision had been taken five or six years ago, when there was a particular problem with waiting times and waiting numbers in Mid Essex Hospital Services NHS Trust—the figures show that in the first four years of this Government, the trust faced an inexorable increase in the number of people waiting for treatment, although there may have been falling numbers elsewhere—it could have played a very positive role in helping to deal with the problems at the hospital by providing extra capacity. As its record shows, Broomfield hospital is meeting the key targets that the Government set. My fear, and that of many at Mid Essex Hospital Services NHS Trust, is that if, on top of the trust's deficit, about which it is taking tough decisions, an independent treatment centre goes ahead at Braintree, it will siphon off patients because it will undertake some of the work that Broomfield does. Although the price will be the same, there is a fear that patients will be siphoned off to the Braintree ITC. That has significant and serious implications for the funding streams and finances of Broomfield hospital.
	I therefore ask the Minister to consider what could be a serious problem and possibly think again, even at this late stage. He may not yet be aware that I faxed a letter to his private office at approximately 7 o'clock this morning. I hope that he will agree to meet me and the senior management of Mid Essex Hospital Services NHS Trust in the near future—because of the time scale—to discuss the matter.
	I should like briefly to consider another matter. Several people who gave evidence about recovery plans to the Select Committee, including Mr. Everett, the director of recovery at Kensington and Chelsea primary care trust, made the point that it was important to deal not only with capacity but improving clinical and administrative efficiency in running hospitals. Any sane person wants to remove excess bureaucracy. I am the first to admit that, given the size and scale of the work that the NHS does, one has to have a first-rate management team to ensure effectiveness and efficiency, but one has to guard against going beyond that to a bloated administrative system. Management teams should seek, in administering hospital procedures, to get an effective, cost-efficient system.
	In that context, I draw the Minister's attention to something that I discovered personally in the past week that appears to run contrary to the Select Committee's report on effectiveness and efficiency and the evidence that it was given. Most people would agree wholeheartedly with the concept of offering patients choice. My party has advocated it for some time, and we always welcome converts to the cause, so we are delighted that the Government have embraced the concept.
	However, before choose and book was introduced, there would be a consultation when patients visited their GPs, who determined the best way forward. If they could not treat the patients, they would recommend that the patients went to their local hospital to see the local consultant who was a specialist in the relevant condition. In my experience and that of my children in the past, one would usually get a letter in a week or so from the local hospital trust to say that one had been referred to Mr. Bloggs the consultant and to set a specific time on a certain date to see the consultant, who would then determine the required treatment and book one into the hospital for an operation or other treatment. That was an efficient, swift and sensible way to proceed.
	Under choose and book, the process is no longer sensible, efficient and cost effective. I do not know whether the system is unique to Mid Essex—if so, someone should explain to the trust that it is the wrong way to proceed when trying to be cost effective, efficient and to save money to plough more into patient treatment. Patients now go to their GPs, who identify a problem and say that they will refer them to a consultant. It is the first time that I have come across choose and book because I fortunately do not visit my doctor often. I was given a choice of five hospitals. I chose my hospital and off I went.
	Six days later, a letter arrived. It was not from the hospital that I had chosen but the GP's practice. It stated that, following my recent appointment, an assessment of the GP's decision to refer the patient to a consultant had to be conducted. If I passed the assessment and it was decided that I should see the consultant, I would have to wait seven days from receipt of the letter and ring a telephone number at the hospital trust to make an appointment to go to the hospital of my choice and see the consultant. It is odd that a committee—presumably—assesses and second-guesses whether the GP has made the right decision.
	The letter was four pages long and included some gobbledegook. By the by, it told me that the location that I had chosen was not the location that I chose. If we are trying to be more effective and efficient, why cannot we retain the tried and tested old system?

Andy Burnham: The hon. Gentleman mentions efficiency and effectiveness. Does he accept that it might be more efficient to ensure that, if patients do not need to go to hospital for an out-patient appointment, they have the appointment in a community setting?

Simon Burns: I completely accept that, but it is not the point that I am making. A GP is qualified to decide whether patients need to be seen in a community setting or whether they should see a consultant at the local hospital. The GP has the expertise, training and capabilities to make that decision.

Michael Penning: Does my hon. Friend know that, even if one sees a consultant, and the consultant, who is much more qualified than a GP, decides that one needs to see another consultant because the ailment requires the opinion of two consultants, one has to be referred back to the committee? It appears that even consultants are not qualified to refer.

Simon Burns: I knew about that, although I confess that I had forgotten my hon. Friend's valid point. After many years of GPs throughout the country working well, I do not understand the need for them to be second-guessed now. I should like the Minister to intervene because he could also tell me who conducts the assessment.

Andy Burnham: Does not the hon. Gentleman accept that many such services throughout the country are clinically led? They ensure that, if possible, someone can be treated outside a hospital setting, at less cost to the whole local health economy and the potential benefit of the individual patient, who will not have to go into the hospital system, with all the inconvenience that that can cause. That makes sense for everybody. Will not the hon. Gentleman balance his remarks and consider for a moment that there may be a positive outcome all round?

Simon Burns: The Minister and I may have to agree to differ because I have more faith in the judgment of GPs to cut out bureaucracy, but let us not argue about it. Even if one takes the Minister's view that there should be an assessment committee—

Andy Burnham: Committee?

Simon Burns: All right, an assessment group— [Interruption.] Let us not quibble about figures and simply say an assessment. Even if one agrees with the Minister that there should be an assessment, why does a four-page letter have to be sent from the GP's practice, not the hospital? If the assessment confirms the GP's decision, why cannot the hospital chosen by the patient simply write, as happened before choose and book, to accept the patient's need to see a consultant and to invite them to turn up at the hospital on whatever day and time is suitable? That would cut out a lot of inefficiency. Of course, one then has the joy—I cannot tell the House about it today because the seven days have not expired—of finding out how many times I will have to ring this number to get through to the appointments people.
	In conclusion, I ask for more thought to be given before bringing in unnecessary assessments, extra paperwork, extra costs and extra time-consuming demands. What will happen is that one will not get an appointment for 13 days at the earliest, whereas under the old system one had an appointment within seven days—although when one actually saw the consultant and treatment started was indeterminate. That is my simple point. I ask for the House's forgiveness because I am due to attend a meeting and have to leave now, but I certainly hope to return to hear the winding-up speeches.

Stewart Jackson: It is appropriate to examine the financial and political context of our debate on NHS deficits. I concede that there has been a 7.5 per cent. real-terms increase in funding over the last 10 years under this Government. Indeed, the only promise that the Prime Minister has kept is that our spending on health is now at the European average. By the end of the financial year 2008, we are looking at spending £92.6 billion on health care. There have been some successes, as I say, with improvements in mortality rates in cancer, coronary heart disease and in-patient waiting times.
	There have also been significant areas of failure, however. Mental health services and stroke care have deteriorated and obesity has gone up by 500 per cent. since 1980. Last week, we were quizzing the Under-Secretary of State for Health on audiology services—a major area of failure by the Government, who have done nothing to alleviate the problem in the last 10 years.
	I believe that the Government have tested to destruction the idea that it is possible to transform the NHS by spending money—without fully costed, comprehensive reform of how the NHS works. The notion that increased funding was all that was needed certainly held sway under the calamitous stewardship of the right hon. Member for Holborn and St. Pancras (Frank Dobson) at the end of the 1990s. It was a theory completely without foundation. Between 1979 and 1997, real expenditure on the NHS went up by 74 per cent.; nurses' pay went up 79 per cent. between 1988 to 1995 when the economy grew by only 54 per cent.; and infant mortality in the first 12 months was more than halved between 1979 and 1997. As the hon. Member for Romsey (Sandra Gidley) said, the taxpayer is entitled to ask where all the money has gone.
	As we enter the period of the comprehensive spending review, one third of NHS organisations are in deficit—a gross deficit of £1.33 billion and a net deficit of £600 million. A wider question is why the NHS is not delivering more wide-ranging reforms and is doing so relatively badly by international comparisons. The most recent Organisation for Economic Co-operation and Development data—published last year—on mortality rates and potential years of lives lost that are a priori preventable show that we rank 22nd out of 26 OECD countries and that we have fallen two places in the period between 1999 and 2003. In fact, the UK has seen no real improvement on mortality rates in respect of stroke care, for instance, and deaths from heart disease are significantly in excess of other OECD members—with the exception, I concede, of the United States.
	Where has all the money gone? The King's Fund found that in the financial year 2005-06, almost half the growth in spending had gone on higher pay for general practitioners and consultants. Indeed, the Secretary of State confirmed in her oral evidence that in the three years to 2005, GP salaries had gone up by 50 per cent. and hospital consultant salaries by 27 per cent.
	At the Select Committee hearings in November, the Secretary of State also conceded that administrative and clerical staff had risen by 72,695 posts since 1997 and that there are now 230,000 administrative and clerical staff employed in the NHS. As I mentioned earlier to the hon. Member for Romsey, Ministers are unable to tell us what contribution they are making to wider strategic plans in the NHS because they do not collect such data. We await with interest the Select Committee report on work force planning, which I am sure will be a smorgasbord of similarly disobliging data.
	The Select Committee learned that the total capital cost of 54 major PFI projects was more than £25 million—we are not talking about loose change here—and had risen by an average of 31 per cent. after the outline business case. No wonder nurses feel aggrieved about being forced to accept a derisory 1.9 per cent. pay rise to fund this incompetence on an epic scale. The working time directive, "Agenda for Change", GP consultant contracts have all contributed to significant cost pressures.

Andy Burnham: Is the hon. Gentleman suggesting that he and his party would favour repealing elements of "Agenda for Change"?

Stewart Jackson: I am merely saying that the Government's incompetence when it comes to executing "Agenda for Change" is awe-inspiring. A Conservative Government would not have gone about it in such a cack-handed and incompetent manner.
	We have seen no evidence of increased productivity over the last 10 years. The Government have preferred to focus on endless reorganisations, which have had little or no impact on patient care. Forty central NHS agencies have been created since 1997; and 400 or more performance targets mean a constant between balancing the books and meeting centralised targets. As we know, targets can be manipulated. In 2004, the Audit Commission cited evidence that in some trusts patients were removed from waiting lists once they had been provided with a future date for an appointment. They were given immediate appointments that they were not able to attend and then classed as refusing treatment or having treatment inappropriately suspended.
	Anyone who genuinely believes in real reform of the NHS would welcome the Government's moves in that direction over the next few years. Conservative Members agree with patient choice and plurality of providers. We believe that independent sector treatment centres are a good development, as are payment by results and practice-based commissioning, but where is the commitment to support the development of care networks and integrated services and why the palpable failure to develop community hospitals, which was a manifesto commitment in May 2005?

Bob Spink: While my hon. Friend is discussing independent treatment centres, may I ask him whether he saw the written answer that the Minister—in his place there on the Treasury Bench—gave me on Tuesday 6 March? It said:
	"Independent sector treatment centres (ISTCs) are paid contract prices, which reflect the outcome of a competitive tendering exercise conducted at national level. NHS trusts and foundation trusts continue to be paid for activity at the national tariff, which is based on national average costs reported by NHS organisations."—[ Official Report, 6 March 2007; Vol. 457, c. 1964W.]
	Does my hon. Friend agree that ISTCs will get the less costly more straightforward cases to deal with—and deal with them very well, I am sure—leaving the NHS trusts with the more complex, more costly cases, yet without unit price increases to reflect that change? Is it not another disaster in the making for NHS funding?

Stewart Jackson: My hon. Friend makes a valid point. It would have helped if the Government had introduced the new tariff on time and given trusts the ability to make the appropriate provision in that regard.
	I share the concern of the right hon. Member for Rother Valley (Mr. Barron) that funding increases in the post-2008 era might be as little as 2 to 2.5 per cent. up to 2011, yet evidence-based outcome measurement barely features in Department of Health policies. Activity does not, of itself, mean improved outcome productivity. Professor Alan Maynard of York university has observed that patient reported outcome measures—PROM—barely register in respect of incentives for GPs and consultants and that, at present, we are talking about a cultural issue. He states:
	"Clinicians do not regulate each other's activities explicitly and professionally. Non-clinical managers remain anxious not to antagonise clinicians, whose goodwill is essential to meet Government targets."
	Regrettably, we are a long way from the example of Kaiser Permanente, which delivers better quality care to patients through close alignment between managers and clinicians in acute hospitals and primary care, as reported in an article in the  British Medical Journal by C. Ham in 2003 entitled "Hospital bed utilisation in the NHS, Kaiser Permanente and the US Medicare Programme".
	In its most recent paper on the issue, published in February 2006, entitled "Public Sector Productivity", the Office for National Statistics found that productivity in the NHS lies anywhere on a continuum between an increase of 0.2 per cent. per annum in 1999-2004 and a decrease of 0.5 per cent. in the same period. That is set against a background of unprecedented spending and output and activity levels.

Graham Stuart: Does my hon. Friend know from his experience before entering the House whether any chief executive would have kept his job if he had doubled spending while seeing no increase—and, in all likelihood, a decrease—in productivity?

Stewart Jackson: The Select Committee heard significant evidence from many people in the private and public sectors. There was a huge amount of anecdotal and empirical evidence pointing to an enormous amount of mismanagement, mainly at Government level through the Department, but also—I have to say, in fairness—at local level. The answer to my hon. Friend's question is an emphatic no.
	In their paper for the King's Fund, Appleby and Harrison found that the benefits of the extra funding would probably not outweigh the costs, if a traditional cost-benefit analysis were carried out. That is a damning finding. Unfortunately, that is the record of this Government.
	I would like to focus on three key areas arising from the Select Committee report: the funding formula and the link to deficits; resource accounting and budgeting, and the target culture; and the impact on patient care, training and development of the cuts resulting from trusts' deficits.
	The Chairman of the Select Committee said that the funding formula dated roughly from 2003. Justified concern has been expressed over the fairness and accuracy—or otherwise—of the formula, and particularly over its static nature and the lack of proper accounting relating to rurality and to multi-site hospitals, particularly in acute trusts. In regard to methodological failings, I would draw to the House's attention the comments of Professor Mervyn Stone of University college London, who described the methodology as based on "questionable" statistical methods, no less. He highlighted the fact that the present formula is based on the current use of health services and indirect measures of health care need. North East London strategic health authority made the point that the formula was
	"poorly evidenced and insensitive to local factors".
	The Department's chief economic adviser found only a
	"moderate correlation...between the needs and age index and deficits in health economies in 2004/2005",
	but it cannot be a coincidence that Professor Asthana told the Committee that there was a clear link between the level of growth in funding and deficits, with 34 out of 60 PCTs in deficit having received a smaller than average increase in funding. Only four receiving the biggest increases were in deficit.
	Age is also a factor. Witnesses appearing before the Committee made the point that the funding formula makes no weighting provision for areas with a high proportion of older adults, such as the south-east and the east of England—my area—where the burden of disease is naturally higher among older people. In fairness, I am pleased to acknowledge that the Department has promised, in its response, a thorough review of the funding formula, including the market forces factor, rurality, and practice-level formulae. We look forward to seeing the results of the research being undertaken by the advisory committee, but I hope that it will act with a degree of alacrity that has not been present hitherto.
	With respect to the resource accounting and budgeting system, I am disappointed that the Department is unwilling to offer assurances that the problem of double deficits caused by the RAB system, which has a direct impact on patient care, will be addressed. I hope that the Minister will be able to comment on that later, particularly as the Audit Commission and the Select Committee have found the RAB system to be an unsuitable and unsustainable accounting regime.
	The Secretary of State's pledge to bring the NHS into break-even or surplus by this month is built on assumptions that entail widespread underspends, recourse to contingency reserves and other smoke-and-mirrors accounting practices. I want to quote the Committee's finding in this respect:
	"Top-slicing is a temporary expedient, but it must not become a permanent part of NHS funding. We recommend that a time limit be set on its use...Continued top-slicing and the establishment of a contingency fund would be an admission by the Department that it accepted that individual trusts would remain in deficit".
	That is an important point.
	We also know that targets for emergency admissions, accident and emergency services and waiting times have had a huge impact and resulted in a huge commitment of scarce resources, without the commensurate improvement in patient care. Indeed, a Healthcare Commission patient survey in 2005 found that 32 per cent. of patients were admitted to A and E within an hour in 2005, compared with 43 per cent. in 2004. That was within the four-hour target, but the service had none the less been reduced.
	Deficits have clearly had a major impact and serious consequences, not least in the constituency of my hon. Friend the Member for Hemel Hempstead (Mike Penning) and those of other Members across Hertfordshire.

Charles Walker: As a Member representing a Hertfordshire seat, I must point out that the deficits are being addressed in a completely brutal way, putting financial requirements ahead of clinical needs. We have been given two years to pay off a £55 million deficit. That will involve a significant reduction in services to my constituents in Hertfordshire.

Stewart Jackson: I sympathise greatly with my hon. Friend. My own trust has seen a £7.7 million deficit resulting in the loss of 185 posts and many bed and ward closures. I commend to the House the sterling efforts of all the Members of Parliament representing the Hertfordshire constituencies on behalf of their constituents to fight the Government's wrong-headed plans.
	The impact of double deficits, of the European working time directive, of the "Agenda for Change", of the mismanaged consultant and GP contracts, of the ongoing IT debacle and of the many other examples of poor central management is best summed up by the hon. Member for Stroud (Mr. Drew), who is not in his place at the moment. He has fought a brave battle against reductions in services in his Gloucestershire constituency. In his evidence to the Committee, he said:
	"The reality is that our area is having to unfairly carry the burden for the high levels of historic overspend...The result is that the SHA area is being asked to make savings amounting to a staggering 5.3 per cent. of turnover".
	Across the country, more than 17,000 posts have been lost, operations have been delayed with the imposition of minimum waiting targets in at least 43 per cent. of acute trusts, funding has been reduced for soft targets such as public health, mental health and sexual health, and there has been a freeze or real terms cut in training and development and staffing posts, as evidenced by the contribution of the hon. Member for Staffordshire, Moorlands (Charlotte Atkins). Sadly, the Government have made no commitment as to when cuts in training budgets will end; that is as we enter an era of potential health spending famine, not feast. The Government have failed to make use of unprecedented and generous spending on health to deliver real and long-lasting reform—which is the basis of better health outcomes—and to achieve the target of reaching European levels of health care. As the report makes abundantly clear, they have missed an historic opportunity to do so.

Richard Taylor: I feel that the gist of the Health Committee report was more critical than speeches so far have reflected. Not being a member of a major party, I can voice such criticisms more strongly, without being accused of political intent.
	My first criticism is of the form of the Government's response. On Sunday afternoon, I set about trying to make sense of it. I plead with the Minister at least to include some cross-referencing in his Department's next response, so that we can see what number recommendation and paragraph the Government response is addressing. It is incredibly difficult to do that without cross-referencing.
	I also make a plea for the Government response to be complete. There is no mention at all of several recommendations. Recommendations 3 and 4—the Minister will probably not know what they were, given the numbering system—refer to the underlying deficits and the large inherited deficits. I would like to have seen more about those in the response. A whole chunk is missing from recommendation 15 in its reprinted version in the response. The missing phrase is,
	"The requirement that a hospital trust pay back a deficit while operating on reduced income is inappropriate for a healthcare service and in some cases impossible to achieve."
	That strong point was agreed by the cross-party Committee. Many hon. Members have mentioned the double deficit, but the matter was not adequately addressed.
	I shall abbreviate many of my comments, because lots of points have already been made.
	In relation to education budgets, at least the Government have admitted the severity of the attack. They promise that the cuts will only be short-term. In paragraph 64 of their response, with regard to the transfer of the multi-professional education and training money to SHAs, the Government say:
	"This was done to allow SHAs greater flexibility to use resources to address local priorities including financial deficits."
	It is a real worry that financial deficits, rather than clinical need, have almost become the first driver, as many Members have said. I absolutely support the aim for financial balance, but the speed with which it is apparently being pursued will cause disadvantages in terms of clinical need.
	There are real worries about the funding formula. Our recommendation 25 states:
	"There is concern about the fairness of the funding formula. We do not consider ourselves qualified to judge whether these concerns are justified. We recommend that the formula be reviewed. Consideration should be given to basing the formula on actual need rather than proxies of need."
	In a recent article in the  British Medical Journal, headed "Time to face up to 'scandal' of funding formula: The government is in denial about the effects of funding inequities on primary care trust deficits", Nigel Hawkes writes that the Health Committee report
	"rather glossed over the effects of the funding formula".
	He also made a definite criticism:
	"A government dedicated to reducing health inequalities, and with most of its MPs elected from areas favoured by the formula, has brushed these criticisms aside."

Andy Burnham: I am trying to follow the logic of the hon. Gentleman's comments. Over the next two years, however, the lowest-growth PCTs will receive a minimum of 16.8 per cent. under the formula, and the average growth for all PCTs will be 19.5 per cent. His argument would have more weight were it not for that hugely increasing tide of spending. Does he not accept that? How can he say that problems are linked to the formula when the evidence is that all PCTs in the country have enjoyed not just a significant but a generous increase under that formula over the past three years?

Richard Taylor: That is why the Committee said in its inquiry that it could not come to a firm resolution. I welcome the reviews that other Members have mentioned, so that we can get at the truth. The funding for my county, however, is below the national average, and £13.6 million below even the capitation target. There must be some connection with the formula. I hope that the Minister will tell us when the Advisory Committee on Resource Allocation will report. Expressions of interest on the review of the need formula were supposed to be in by 8 March, so I hope that progress will be made.

Bernard Jenkin: Does not the hon. Gentleman's concern have much more urgency, given that increases in NHS expenditure over the coming years are likely to be much tighter than in preceding years? The discrepancies in the formula allocation, if they exist, will therefore have a much more detrimental effect on underfunded authorities.

Richard Taylor: That is why the inquiries instituted—one of which is supposed to report by autumn this year, and the tenders for the others are out—need to be completed as quickly as possible.
	On staff costs and reductions, it is not surprising that the Department does not agree with the Health Committee about the role that the underestimated costs of contracts played in the deficits. Obviously, it minimised the figures that other sources have emphasised. The Department has a marvellous way of deflecting criticism. Paragraph 57 of the Government's response states:
	"Each of the pay reforms addressed fundamental weaknesses in the previous pay contracts, including recruitment and retention problems, poor control over outputs provided by doctors and other staff, poor control over earnings growth, low productivity growth and significant exposure to equal pay risks. The fact that the contracts address these inherent weaknesses is evidence of good long-run financial management."
	The only way in which to reduce spending in an NHS that is very labour-intensive is obviously to reduce staff. Paragraph 61 of the Government's response states:
	"As Trusts become more efficient, they can continue to provide high quality care with fewer staff. We know from individual Trusts and SHAs that reductions in posts are being managed in ways that minimise the needs for redundancies—for instance through recruitment freezes, natural wastage, and redeployment."
	That does not take account of the fact that, although the number of redundancies is not very great, because of those effective vacancy factor measures, the reduction in staff numbers is really quite extensive.
	A  Health Service Journal survey of 100 chief executives, published a week or so ago, revealed that more than two thirds believed that patient care would suffer as a result of short-term financial decisions. My own trust has a freeze on about 10 per cent. of its staff, and it is hard to see how that will not affect the quality of care. It told the Health Committee, referring to staff cuts:
	"This will involve a comprehensive review of services across the three sites and serious questions about their sustainability."
	Important recommendations that have been rather brushed aside concern collective responsibility and value for money. In respect of collective responsibility, recommendation 22 speaks of the importance of including clinical staff, as spenders and as deciders of the way in which money is spent. The Government's response to that is rather thin. In respect of value for money, recommendation 21 mentions a very good Department of Health paper, "Better Care, Better Value Indicators"; but I wonder what the Department is doing about recommendations that could, if publicised, produce dramatic savings.
	Notwithstanding the Government's response, my overall view remains that the Department of Health is largely responsible for the deficits. Following its interviews with health service chief executives, the  Health Service Journal came up with some pretty strong quotations. One chief executive said of Ministers
	"they never once stopped to find out what it would cost to implement the latest good idea."
	Another spoke of
	"Blind panic as ever. No consistency of approach".
	I absolve this Minister, because I know that he was not around at the time. The chief executive went on:
	"Bear in mind much of the financial challenges arise from centrally conceived pay schemes... which were ineptly designed and criminally costed by the Department of Health—despite warnings and advice from the service."
	I believe, and the Health Committee report emphasises, that the Department of Health must bear much of the blame for the state we are in.

Michael Penning: I congratulate Members on both sides of the House on their contributions to the debate on a report by a Committee of which I had the honour of being a member. In particular, I congratulate other members of the Committee.
	It was slightly disturbing to note that some Labour speakers had obviously not read the report. One Member, who is no longer present, asked "Where are these job losses?" Had he read the report he would have seen evidence given by Mr. David Law, chief executive of West Hertfordshire Hospitals NHS Trust in my constituency. He admitted—although he did not want to do so, probably because he was worried for his staff and for his own position—that 750 jobs in the trust would go. The evidence is in the report, and it is a shame that Members should make such comments without reading it.
	On a lighter note, I can tell the House that Sir Humphrey is alive and kicking in the Department of Health, because he is clearly responsible for the Government's response to the report. I agree with my hon. Friend the Member for Wyre Forest (Dr. Taylor) that half the response is gobbledegook: anyone who can make sense of it must work in the Department of Health. It gives no cross-references, and does not refer to half the conclusions of the report. That too is a shame, because it is a very good report, and it is not a minority report. Members did not drop out, feeling that they could not put their names to it; everyone worked hard to establish a consensus that would help the NHS to make progress. The House has already heard about the quality of the evidence that we received, and the Minister is well aware of some of it. It is a pity that the Secretary of State is not present so that the Minister need not take the flak for her, as he often does. Certainly she would have had some flak from me had she been present, as she probably knows.
	Many of the comments that I was going to make have been made by other Members, but I want to say something about the funding formula. That will not surprise the Minister, because—over many years, to be fair—it has had a hugely adverse effect in my constituency, and on the future of the acute hospital trust there. That is why I was so proud of the chief executive when he gave evidence to the Committee.
	Some trusts are in such a difficult position that documents are being leaked to Members under threat. As I have said to the Minister before, it cannot be right that NHS staff are scared to blow the whistle on what is going on in the NHS. They are in the NHS because they care for their patients and for the community, and they should not have to worry about their jobs and look over their shoulders every five minutes. In the West Hertfordshire trust, notes are being issued telling all staff that it is a disciplinary offence to order temporary staff, or to order non-pay items.
	The fact that the PCT and the acute hospital trust in my constituency are in such a terrible state has a great deal to do with the funding formula. I raised the issue in the Select Committee when the Secretary of State was giving evidence, and I have raised it in the House, but I am not ashamed to raise it again. In my constituency, the acute trust and the PCT receive about £970 a year to look after the health care of my constituents. The Secretary of State's constituency receives roughly £400 a year more. I am not saying that every constituency in the country should receive exactly the same under the funding formula, because there are clearly areas of social deprivation, but the deficits in my constituency could be wiped out, not with £400—or £300, or £200—but with £100.
	Members have asked why the discrepancy is so great. The position is particularly bad in constituencies such as mine. My constituency was a new town: indeed, we still call it a new town, although it was built in the 1950s. At that time, a huge amount of the work force left north London and other London areas, and went to work in the new towns. There were hardly any members of the older generation in the towns, because very few retired people went there. Now all the working people have retired, and we have a huge pensioner population. It is fantastic news for my family and those of my constituents that people are living longer, but the burden on the NHS is phenomenal. The formula does not address that.
	The Secretary of State told the Committee many times, as the Minister has told us today—and I accept it entirely—that a huge amount of money has been invested in the NHS. That is taxpayers' money: not the Government's personal money, but revenue raised with promises that the NHS would improve. The state of my constituency, and other constituencies mentioned in the Committee's report, clearly shows that it has improved in some areas and worsened in others.
	When I asked the Secretary of State to explain why my acute trust was suffering so much in comparison with her constituency, she said "Your constituents are healthier than mine." I raised that in a debate the other day. I had much less time to speak in it—I was restricted to six minutes—than I do today, so I have a little longer to elaborate. The Secretary of State said, "Your constituents are healthier than mine; that's why I get £400 a year more than you do." However, we are talking about an acute trust with an accident and emergency department, a cardiac unit, a stroke unit, and until recently a brand new birthing unit, which is now being used as offices because we cannot pay for any midwives to staff it. The Secretary of State completely misses the point.
	What will happen to those who are in most desperate need? One of the most dangerous parts of the M1 runs through my constituency—it is to be hoped that the road-widening project will reduce the number of fatalities. All the people who are involved in road crashes and other road traffic accidents on that stretch of the M1 come to Hemel Hempstead's accident and emergency department, which is now to close. It will therefore be necessary for every single one of them to be driven past my hospital—if anything is left of it—and to be taken to Watford up the A41, which will cause huge delays. I am afraid that people will die. There is no argument about that—all the experts agree that will happen. That is why local GPs in my area have sent a letter of no confidence in the Government's proposals.

Graham Stuart: Does my hon. Friend agree that in respect of funding we are currently using proxies of health need rather than health need itself? Does he also agree that if we are to use a crude proxy, the most accurate crude proxy of health need is age, not prosperity? This Government are deliberately using deprivation as the key determinant of health need, whereas if a crude proxy is wanted, age is a better one. The most important thing that the Government can do is to take lessons from this cross-party report, which says that we must get rid of proxies of need and use actual health need as the future funding determinant. I hope that we shall hear that that is the case from the Minister today.  [Interruption.] If that were to happen, instead of mere barracking from those on the Labour Benches, positive steps would be taken as real health need would be made the basis of the funding formula for health care in the future.

Michael Penning: My hon. Friend makes a good point. Evidence to our inquiry brought to light the fact that my constituency is in an interesting situation because it has not only a very large pensioner and retired population, but two of the most deprived estates in south-east England. Therefore, it meets the funding criteria in terms of both age and deprivation, so, in theory, we should benefit as a result, but we do not.
	The Government's decision to spearhead—to borrow the terminology that is used—money into areas of social deprivation has not been addressed much in our debate. I could not find any reference in the Government response to how those amounts of money are calculated. Their response suggests why that happens, and I understand it—although I do not agree. How is each individual pound calculated in respect of the money that goes into those spearhead areas? It is worth noting that there are few spearhead areas in the south-east where most of the deficits occur, which is a surprise.
	The hon. Member for Staffordshire, Moorlands (Charlotte Atkins), who is no longer present, said that when the financial crisis in her area was exposed, the board concerned resigned en bloc. I wish that that was the case in my constituency, because perhaps we would then get to the bottom of why we have such a bad management structure in my area, and why we are in our current position. I say that because, although I am critical of the Government on account of the deficits that have been caused by the funding formula, there has also been acute bad management, as the report highlights. We cannot just blame local management: the Secretary of State is responsible for appointments—for signing off the appointments of chairs and chief executives of all health trusts in this country. That is her responsibility. I intend shortly to ask how on earth the Government failed to notice some of the problems that arose.
	It is true that the Government ploughed huge amounts of money in, but they set narrow targets for how the money could be spent. That was highlighted in detail in evidence to the Committee. What clearly happened is that the targets were set—"You must reduce this, or else"—and the money was spent willy-nilly. As has been said, no other organisation would be allowed to get away with that. No other organisation would be allowed to have an open cheque book and to spend money, and just carry on spending it—taxpayers' money—in that manner. I am particularly concerned about something that is not mentioned in the report: not only did the strategic health authorities not realise what was going on, nor did the Department of Health and its Ministers. On this occasion, I am not blaming the Minister, he will be pleased to know, because he was not around when most of that was going on, but the Secretary of State and some of the other current Ministers most certainly were.
	There have been huge increases in taxpayers' expenditure on the NHS. The relevant sum is £100 billion—we have almost reached that amount this year. How on earth have we got into what is probably the biggest financial crisis since the NHS was established? In evidence, the Government were continually dismissive. The problem is not that bad, they said. I think that the phrase that the Secretary of State used was that it was merely a pebble in the pool. "This is just a tiny ripple of a problem," they said, but every Committee member agreed that it was not a tiny problem, but a huge one.
	It is a problem that has arisen for lots of different reasons, not least inept financial management throughout the NHS, including right at the very top. How can one day the head economist of the Department of Health say in evidence that the funding formula is a major contributor to the deficits, and, at the following evidence session, the Secretary of State say, "No, it's not"? When I pointed out to the Secretary of State that her own economist had given evidence to the contrary to the Committee, she fobbed us off. Evidence to support my point is in the report.  [Interruption.] Is the Minister agreeing with me from a sedentary position? If he is, he should have addressed that issue in the Government's response to the report.
	The report is important, and the Government response does not do it justice. If Sir Humphrey is still wandering the corridors of the Department of Health when the current Conservative leadership is elected to government, he will get the bullet.

Phil Willis: I am not a Health Committee member, but I was particularly interested in the report and I congratulate the right hon. Member for Rother Valley (Mr. Barron) not only on introducing an exceptionally interesting report, but on engaging a wide range of opinions on it and the Government response. That is highly commendable.
	I am glad that the hon. Member for West Chelmsford (Mr. Burns) has returned to his seat. It was interesting to listen to a Conservative party member talking about his opposition to plurality of providers within the NHS, because I thought that that was standard policy. To have treatment centres offering different approaches seems to me to be absolutely right.

Simon Burns: Will the hon. Gentleman give way?

Phil Willis: Not at present. I also listened to the remarks of the hon. Member for Castle Point (Bob Spink).

Simon Burns: Will the hon. Gentleman give way?

Phil Willis: No, I will not give way. I am just making a comment on the— [Interruption.]

Mr. Deputy Speaker: Order. This is a serious matter. Perhaps we can conduct our affairs with a little more decorum.

Phil Willis: Thank you, Mr. Deputy Speaker. It is also interesting that the hon. Member for Castle Point, who sits on my Committee—the Science and Technology Committee—recognised that when contracts are offered to the private sector it is not surprising if private companies cherry-pick business. That is why our hospital trusts are left with the more expensive and involved cases. I say that in order to make an observation on the remarks of the hon. Members for West Chelmsford and for Castle Point.

Simon Burns: Will the hon. Gentleman give way?

Phil Willis: I shall do so now.

Simon Burns: I am extremely grateful to the hon. Gentleman for giving way. I am aware that the Liberal Democrats are skilled at misrepresenting people, but may I explain to the hon. Gentleman—who obviously was not intelligent enough to understand what I said earlier—that I was not complaining about the plurality of provision but suggesting to the Minister that having an independent treatment centre so near to a hospital that was doing well might have an adverse affect on it? I was not saying that there should be no plurality of provision in the health service.

Phil Willis: I am delighted that I have been able to give the hon. Gentleman an opportunity to clarify that. We now know that we can have plurality, provided that providers are not too near to other providers. That is a clear position for the Conservative party to adopt.
	Let me tell the Minister and the right hon. Member for Rother Valley, who is no longer in his place, that I agree—indeed, my hon. Friend the Member for Romsey (Sandra Gidley) made it clear that the Liberal Democrats agree on this as a party—with the general principles that the Government are trying to follow with their health service reforms, in that what matters is the treatment that individual patients receive. We are all trying to reach the same point. When the NHS was founded, its purpose was to treat individuals according to their clinical needs. We are strongly in favour of that. There might be different journeys on the way to that point, but I would like to think that the whole House would coalesce around that specific objective.
	The real issue is that we cannot allow primary care trusts, individual hospital trusts or any other trusts that provide care to be told that they must control their budgets and manage within them, but then to be given directions from the centre, over which they have no control, that impact on their budget decisions. Government targets and new initiatives have already been mentioned in that regard. Local PCTs have absolutely no control over initiatives that come from the Department, but they have to treat them as priorities. In many cases, that will distort their budgets.
	PCTs have also changed. In the almost 10 years that I have been an MP, there have been four changes to the organisation of PCTs and their predecessor bodies. That does not give the necessary firm foundation on which to take long-term decisions about health care needs within a particular area. All those decisions have had an impact on the budgets that were to be given to front-line providers, yet they had no control over those decisions.
	The latest decision to affect North Yorkshire and York is the huge reorganisation of PCTs that has left our area with the largest deficits of any PCT in the country. In Harrogate and Knaresborough, the PCT and the hospital were in balance, but they had a 2.5 per cent. budget cut, through top-slicing, and we have had to pick up the huge problems from the Selby and York—the hon. Member for City of York (Hugh Bayley), who is in the Chamber, will know about that—and Scarborough PCTs. It is wholly wrong to tell my local hospital trust that it has to pay the penalty for mismanagement elsewhere or for centrally driven targets and initiatives. The Government cannot have it both ways—but that is the effect of their argument.
	Like most areas, ours has received significant rises in health budgets. Conservative Members have admitted that getting to the European average was a significant Government initiative. I congratulate the Minister and his colleagues on that. This year, North Yorkshire and York has received a 9.5 per cent. increase in budget, which is £69 million extra, but we have had to address a £43 million deficit. Last week the PCT told us that it had made significant inroads into that deficit, which is now only £35 million. However, those reductions include a reduction in the money available for redundancies, which is purely a paper transaction, and in other transactions and capital costs. The reality is that constituents across my patch face significant cuts to services.
	The trust at Harrogate district hospital is not only a three-star trust, but the highest-performing trust in the country. That is down to the work of its brilliant chief executive and good clinical staff, but it now has to cut back on treatments. What is the effect of that? Something that has not been mentioned much today is the effect that such changes have on people. The hon. Member for West Chelmsford—I hope that he does not shout at me again—rightly mentioned choose and book, and the complications that came with it, particularly with the intervention of an assessment panel; I do not know what the correct terminology is, but I shall call it an assessment panel. I hope that the Minister will sort out that interface between GPs, consultants and the PCT. I believe that he is committed to resolving these problems,
	The problem is not just about money; it is the imposition of organisation from the top. I shall give hon. Members a few examples, the first of which is an excerpt from a GP's submission to what is known in our area as the exceptions panel—an interesting name—about a lady in my constituency who has significant bilateral knee pain. He wrote:
	"Clinically I suspect she has a cartilage tear. I referred her to Orthopaedics on the 27th of December 2006 and received a reply from the referral and clinical advice service dated the 10th of January, suggesting that I refer her for MRI imaging, rather than an immediate orthopaedic referral."
	He goes on to say that after discussing the matter with the patient, he did as he was asked, only to get a letter back refusing the MRI request because he now, apparently, needs prior approval from the PCT's referral panel. That is absolute nonsense. That GP has made a clear clinical assessment—the very purpose of the NHS—and someone else is second-guessing that assessment.
	I particularly want to discuss the case of a three-year-old boy in my constituency called Elliot Isaacs. I suspect that many right hon. and hon. Members will have similar cases in their constituencies. Elliot has major hearing problems. After a long fight, he was fitted with grommets in both ears last summer. That made a huge difference to him, and he suddenly began to communicate more effectively. His speech improved, and obviously his hearing had improved significantly. He was making substantial progress—until the grommets came out in October because of a related illness. That is quite common; it certainly is not unusual. He is now being refused—not by his consultant or GP, but by the faceless interface between the GP and consultants—the opportunity to have grommets refitted and to be able to hear again and develop.
	All hon. Members who have young children know that those early years are the most critical age for the development of language and everything else that goes with it, but that decision was made by that impersonal interface. The irony of it is that Harrogate hospital, which carried out the first operation, performs grommet operations on a daily basis for patients from Leeds, because the PCT there has the money to send its patients to Harrogate to have those operations. If that is a local care system responding to the needs of local people, I am a Conservative—or a Dutchman, or whatever.
	That is the principal issue to which I would like the Minister to respond. His response to the Select Committee report does not address some of its core recommendations. There has to be a two-way street between organisation and local autonomy. Yes, financial prudence and good financial management are necessary, but so is independent decision making, and local trusts must have the right to make those decisions.

Bernard Jenkin: I follow the hon. Member for Harrogate and Knaresborough (Mr. Willis), and I share some of his dilemmas, in that I come from an area in which the health authority was running things in line with the financial restraints imposed on it and is being punished for the sins of others, as we try to bail them out. I commend the Chairman and Members of the Select Committee that produced the report. I agree with the hon. Member for Wyre Forest (Dr. Taylor): this is a seriously hard-hitting report. It explains why, fundamentally, all the extra money that has gone into the health service has had so little beneficial effect. The money has cushioned the health service against the need to reform, when the reforms should have been prepared in advance of the extra money going in. Unfortunately, we have seen a huge increase in budgets and little reform.
	The report does not pull its punches. I invite hon. Members to look at paragraph 63 onwards. The headings tell the story: "Poor local management", "Poor accounting and financial management", "Lack of leadership and loss of management control", "Poor central management by the Department of Health", and "Badly-costed work contracts". Those are just the headings for the litany of management and financial failure in the health service, which has affected it at every single level. The East of England strategic health authority, my local strategic health authority, is cited in paragraph 24 as one of
	"the four areas...in greatest difficulty".
	Colchester and Tendring primary care trusts, which are now called the North East Essex primary care trust, are paying the price for the financial failures of other areas. We have to recover a deficit of £6 million in the current financial year, because the East of England strategic health authority appears to have removed £7.8 million of our spending capacity in the present financial year. Next year it will take another £5 million of our spending capacity. That is because of deficits in Suffolk of £30 million, in Cambridgeshire of £52 million, and in Hertfordshire of, I was told, £42 million, although I now hear that it is £55 million.
	The impact of those deficits on the health care in my constituency is considerable. I have hospital consultants telling their patients and me that they have been instructed by their management to lengthen the waiting times to the maximum period—not to shorten them or reduce suffering—in order to delay expenditure until the following financial year. I have a LIFT, or local improvement finance trust, programme—a GP surgery improvement programme—that is being thrown into suspense. A number of substandard surgeries in my constituency, in West Mersea and other areas such as Wivenhoe, have been told that they have to wait even though their expectation was, years ago, that they were going to be given new modern surgeries.
	I cannot let the moment pass without adding my voice to the concerns about some of the private finance initiatives that we have seen in the area. They have turned out significantly more expensive and significantly wrongly specified. Whether that is the fault of the contractors or the health authorities is a matter of dispute. They have locked in a degree of expenditure that is therefore not available for spending on other things.
	The solutions are obvious: much stronger financial management, much less central Government interference, and fewer initiatives and short-term targets from the centre. I commend the Government's endorsement of reserves, which is set out in paragraph 80 of their response. They say that they wish to
	"now encourage the NHS to plan towards achieving surpluses".
	Particularly where there is to be increased volatility in trusts as a result of payment by results, a more businesslike approach to cash management and cash reserves will be a necessity. The funding of the NHS will have to reflect that.
	I conclude my brief remarks by simply saying that the past 10 years of management of the health service reflect not so much the Prime Minister's intentions for the direction of the health service as the Chancellor of the Exchequer's control of the health service. The present mess is the Chancellor of the Exchequer's mess. Like us all, he will have to confront the truth of why, as the country nears a European average spend on health, health outcomes in this country are still so inferior to those in so many of our European partners.
	That has much to do with the whole concept of the NHS as presently conceived, with too much central direction and control and not nearly enough local management and control. Unless we all embrace that, more money will be wasted, more patients left untreated and more misery inflicted on our constituents. I know who my voters will blame. After all the promises that the Government made about improving and saving the NHS, my voters, and I guess voters all over the country, are more bitterly disappointed and disillusioned with all politicians—as a result of the Government's failure on the NHS—than I have ever known them.

Andrew Lansley: I am glad to follow my hon. Friend the Member for North Essex (Mr. Jenkin), who was admirably brief but very much to the point. He, like others in the debate, was speaking from experience of the impact of deficits on his constituents. As he said, not only will voters hold the Labour party responsible—comparing the situation with all the promises that they were given 10 years ago—but it is the Chancellor of the Exchequer's responsibility. People say, "How can it be? He's not in charge of the Department of Health", but when one looks at the report and sees the way in which accounting changes and things such as the abolition of capital-to-revenue transfer, the abolition of brokerage, and resource accounting and budgeting are affecting NHS trusts, one realises that such things are the responsibility of not only the Government, but the Treasury. The Chancellor of the Exchequer will not be able to escape responsibility.
	A number of Members were generous to the Minister who will respond to the debate, but when the time comes he is not going to escape responsibility either. If one wants to know how complacent the Government were, one has only to go back to March 2005, in the run-up to the general election, when we raised the difficulties with the emerging deficits in the 2004-05 financial year. What was the response of the Minister's predecessor, the right hon. Member for Barrow and Furness (Mr. Hutton)? It was, "Oh, they always say that there are going to be deficits at this time of the year and it always gets sorted out." The whole point is—the Select Committee's report is perfectly correct in this respect—that it was in 2004-05 that capital-to-revenue transfers were eliminated. So, of course, the situation was not sorted out in the way that it always had been in previous years.
	Before I turn to the deficits, I want to say a word of commendation to colleagues who have spoken. The right hon. Member for Rother Valley (Mr. Barron) did justice to what is a good, robust report. As my hon. Friend the Member for Hemel Hempstead (Mike Penning) rightly said, it was agreed on a consensus basis, as I think that all Health Committee reports have been. Rightly, the report made some trenchant criticisms and I hope that, when the Minister replies, he will accept them. When senior officials in the Department of Health were asked last year whether the Department was good at managing change, 81 per cent. disagreed or disagreed strongly with that proposition. The Department does not believe that it is managing change well; it knows that it is getting these things wrong. We know from the Healthcare Commission that primary care trusts that have been plunging into deficit have poor financial management. None was given an excellent rating and 124 were given a weak rating. Weak means that they need immediate action to remedy their financial failings.
	Some important points were made during the debate. My hon. Friend the Member for West Chelmsford (Mr. Burns) made an important point about the nature of choose and book, and referral management. There are a number of Members from north Yorkshire present. I was talking to a GP in north Yorkshire who put things extremely well. He said, "What is the point of having a system that allows us to exercise choice if I sit down with a patient and look at the waiting times and he can choose to be seen at Leeds, which is quicker than being seen in York, and we put that into the system and the information goes off to a referral management centre, only for him to be told that he can be seen at Leeds, but he's going to have to wait 20 weeks anyway?" As my hon. Friend the Member for North Essex said, the week before last the BBC found that 43 per cent. of primary care trusts throughout the country are imposing minimum, not maximum, waiting times, and saying that patients cannot be seen before a certain date.
	A question that I keep asking the Minister and to which I never receive a satisfactory reply is why, in the latter part of this financial year, have not the Government allowed primary care trusts and local hospital trusts to arrive at marginal pricing deals, whereby they say, "We have capacity, you have limited resources; we can estimate our marginal cost of sustaining that capacity and treating patients, so let us treat more patients for a given budget." The tariff and the Government's determination that it should only ever be a uniform price are damaging patients' prospects.
	The hon. Member for Staffordshire, Moorlands (Charlotte Atkins) was the only other Labour Back Bencher who supported the Select Committee, which surprised me. There were many contributions from the Opposition Benches, but it is all too predictable that Labour Members will not come here to defend their record, even when a cross-party Select Committee is exposing the problems.
	The hon. Lady made an important point about nurses' pay, which the Minister might want to explain. Since 1984, Governments have had independent pay reviews, and it has always been understood that one of the constraints on pay reviews is affordability. The Government went to the pay review body and said that 4 per cent. was the maximum affordable and that a 4 per cent. increase in average earnings for nurses in particular was consistent only with a 1.5 per cent. basic pay increase. The Committee then asked the Department for evidence that pay drift would be 2.5 per cent. so that it could see the justification for the case. If Labour Members read the relevant paragraphs of the report, they will see that the pay review body says that the Department could not produce the evidence and could not justify its case. The Department's financial mismanagement is so profound that it cannot even justify its own arguments on pay. The Department ignored the pay review body and substituted its own belief, which is one reason nurses are angry. They were promised an independent pay review on the basis that it would not be overridden, but it is being overridden.

Bernard Jenkin: Is it not an insult that the Government claim that nurses are getting a higher increase on the basis that they will receive seniority increases? The Government are pretending that the pay increase is higher than it is because the average nurse will receive incremental increases, which they deserve anyway.

Andrew Lansley: My hon. Friend is absolutely right, and the pay review body used robust language, both this year and last year, when it said that the Government had tried to treat the framework for rewarding proper changes in knowledge and skills, increases in overtime, incremental progress through scales, and so on as a justification for a low basic pay award, but if the basic pay award does not keep pace with the need to ensure recruitment and retention there will be serious problems in years ahead.
	I have not done justice to the debate, but I want to turn to some specific points. It does not make sense to spend a long time examining why we have arrived at the situation we are in, not least because the Government do not know. On 20 February, the chief economic adviser to the Department published the report to which the Chairman of the Select Committee referred. He said that he was asked to complete it within 20 weeks, so it should not be supposed that analysis of the various issues is definitive and complete in any sense. His report does not complete the conclusions, and he made some peculiar comments. He seemed to say that it does not matter whether some money was wasted because it might have been spent on something else, so it would not have had an impact on the budget overall. I shall offer Ministers an example, because it does matter if money is wasted.

Kevin Barron: That is not fair.

Andrew Lansley: I am not being unfair. I shall quote exactly what the chief economic adviser said:
	"We shall not, however, engage in lines of analysis which put deficits down to expenditure which turned out, in the estimate of the protagonist, to be 'wasteful'. Had this expenditure not been undertaken, some other expenditure, hopefully less wasteful would have replaced it, and with identical consequences for the budget".
	I am not being unfair.
	We talked about independent sector treatment centres. We are not against using the independent sector, but we object to using it in this way, because it does not make sense that the independent sector receives 11 per cent. above the tariff and is paid for 100 per cent. of treatments even if it is not delivering them. The last answer that I received from Ministers was that treatments were running at 83 per cent., yet centres are paid for 100 per cent. Some of that money, instead of buying treatments that are not being provided by independent sector treatment centres, could have been used to buy additional capacity in NHS hospitals, which clearly exists. That would not have been wasteful and would have made a difference to budgets because PCTs would not have had to spend so much on them.
	A number of hon. Friends said that the issue comes down to productivity. The chief economic adviser to the Department of Health referred, interestingly, to
	"the disappointingly flat trend in NHS productivity over recent years."
	We all know that that is true, but that was the first time I heard such an admission from the Department.
	One of the lessons that the chief economic adviser said should be taken is that enthusiasm for making productivity improvements is diminished in an environment of rapid growth and resources. That is bureau-speak for saying that if people are given a load of money, they will not have to try so hard. He continued to say that, therefore, mechanisms for driving through productivity improvements should specifically be strengthened at the time extra resources are made available. Yes. Absolutely. Where were they? The point is that enormous amounts of money were coming in, rightly so—9 per cent. real terms increase, including next year—and payment by results is a valid means of ensuring that resources are deployed to buy additional activity, but it must be in a context of genuine competition for those resources, which it was not, and of effective demand management in commissioning them, which it was not. In places such as south Yorkshire, where a foundation trust economy was established and where PCTs had not previously had a problem with deficits, the hospitals were incentivised to undertake activity and to do more, as in 2004 and again in 2005, with no effective demand management. What is happening throughout the country is not effective demand management but financial crisis management. Instead of GP commissioning—much more effective demand management—deals such as marginal pricing to use hospital capacity are ignored.
	Where do we go now? What about the review of resource allocation? Ministers, particularly the hon. Member for Leigh (Andy Burnham), are trying to escape from the fact that was clear in evidence to the Select Committee, which rightly had a long discussion about it: the present resource allocation formula does not accurately reflect the real incidence of need. That is why the Committee said that the Government should look at actual need rather than proxies of need. That is our view. We are not arguing for a specific formula. We are arguing for a formula that more accurately and fairly reflects actual need, not a formula that tries to deal with health inequalities through ever larger distortions in the availability of NHS services, as though inequalities in health outcomes were principally the result of changes in NHS expenditure. Everyone knows that that is not true—we have debated the matter in detail—and everyone knows that it is about relative economic deprivation, environmental circumstances, housing, poor education, diet and so many things that are unconnected with the level of NHS services. We should make NHS allocations relate to need. That will, of course, include a consideration of deprivation, but deprivation and health inequalities are not principally dealt with by NHS allocations, because a separate allocation is needed for that purpose. When will the Minister deliver the review of resource allocation? Why cannot that be done sufficiently quickly to try to influence resource allocation before April 2008?
	We talked earlier about resource accounting and budgeting. Clearly, it must be in the interest of NHS trusts that action is taken in time for the 2007-08 financial year, but Ministers are still not explaining why they cannot achieve that. I am told that the Government were going to include a measure in the operating framework for 2007-08, but that it was taken out at the last minute. Why will they not do so?
	Does the Minister think that NHS trusts that are not yet foundation trusts, but meet the criteria under Monitor for becoming a foundation trust, should have their historical debt turned into public dividend capital? We could then give them, at least, all the advantages of escaping from their historical debt, which they could manage as equity on their balance sheets. Of course, they would escape from RAB if they were to become foundation trusts.
	Will the Minister tell us the top-slicing proposals for 2007-08? We heard, not least from my hon. Friend the Member for North Essex, that top-slicing is going to happen, and it will continue to penalise primary care trusts that have managed their finances well. This year and next will be the last two years of the Government's planned major increase in NHS funding, yet all the resources for growth are being taken away to deal with the problems of deficits. There are problems due to cuts in some parts of the country, but the problem in most places is that the expected improvements in services cannot be funded at all. Will the Minister restore to PCTs that are in good financial health the ability to spend their resources on improvements in services in their areas?
	We have bitterly criticised Ministers on several occasions for the scale of the cuts in education and training. If one asks any normal business how it gets out of its financial problems, one will always hear, "People are our most important resource, and investing in our people will be one of our priorities to enable us to escape from the problem." However, that does not apply to the Government or, apparently, the NHS under them. Will the Minister tell us that the cuts in the education and training budgets in 2006-07—some £350 million, or thereabouts—will not happen again in 2007-08? Will he thus, by extension, make it clear that the options for the future to deal with unemployment after graduation among nurses, midwives, physiotherapists and other therapists can be implemented with those resources? At the moment, the problem is not being tackled because of cuts in the budgets. Ministers will not come to the House to explain themselves about modernising medical careers. However, the budgets clearly will matter next year to the ability of the multi-profession education and training budget to support additional training posts to ensure that the junior doctors who have been supported up to now in this country can continue to fulfil their vocation by entering training posts in the NHS. Will the Minister give a commitment on that?
	We have had a good debate in which important points have been made. However, the robust nature of the Select Committee's report was not reflected in the nature of the Government's response. The response was not robust but a response from a Department that is still in confusion with Ministers who have no idea about how to move the situation forward, except by simply cutting budgets to try to save their jobs, even if that is at the expense of the jobs of NHS staff. That is not acceptable to the people of this country. The Government should be setting out as a response how they will achieve not only financial stability, but the improvements in the NHS for which people have been paying through their taxes. We will hold the Government to account on that.

Andy Burnham: It says in my notes that I should congratulate my right hon. Friend the Member for Rother Valley (Mr. Barron) on securing the debate. However, when I settled down yesterday afternoon with a file on NHS deficits, I nearly scored that bit out. However, he did save me from Watford versus Plymouth, so perhaps he did me a favour in the end.
	We have had a very good debate. The Health Committee, which is chaired by my right hon. Friend, has produced an extremely comprehensive report on deficits in the national health service. I put on record the fact that we value his contribution and that of his colleagues on the Committee, many of whom are in the Chamber and have contributed intelligently to the debate. As we said in our official response to the report, we are pleased that many of the Committee's recommendations resonate firmly with the actions that the Department already has in hand to improve financial management both centrally and throughout the NHS. We believe that those actions will lead to a sustained return to financial health by the end of this year.
	May I begin by answering a question put by several hon. Members? We have heard the refrain, "Where has the money gone?" from the hon. Members for Hemel Hempstead (Mike Penning), for Romsey (Sandra Gidley), for Peterborough (Mr. Jackson) and for South Cambridgeshire (Mr. Lansley), so let us talk about where the money has gone. I accept that Health Ministers often speak at the Dispatch Box about the new buildings that we have put in place in the NHS, but I noted that during the long contribution made by the hon. Member for Peterborough, he did not mention once the new private finance initiative scheme that is going forward in his constituency. It seemed that the good things were miles from the thoughts of Conservative Members and that they did not want to give credit for anything that had happened.
	We often talk about more staff, better pay for staff and more operations. All those things are justified, but the crucial thing that matters is the relative improvement that we are securing to the health of people not only in the more deprived parts of the country, but throughout the whole country. Let us consider the coronary heart disease mortality rate among males. When we came into government, 126.6 people per 100,000 population died from CHD before they were 75. The rate in England is now 74.5. That represents a huge improvement throughout the country, and the improvements in some of the more deprived parts of the country have been even greater —[ Interruption. ] Conservative Members should listen before dishing out criticisms and comments.

Graham Stuart: Will the Minister tell us what the trend was before the Government came to power and what it has been since?

Andy Burnham: If the hon. Gentleman is arguing that the national service frameworks on the big killer diseases and the money that has followed them have had no impact at all on the acceleration of health improvement, he is mistaken, even though he takes such an interest in health matters.
	In 1997, the death rate from stroke among males in England was 29 per 100,000 population, yet the figure today is 18.2. Cancer mortality among males was 155 people per 100,000 population in 1997, yet the rate today is 129. I cite those figures because they are not just statistics on a page. One cannot put a price on the lives saved and the improvements made due to the investment. Conservative Members dismissively say, "Where has the money gone?"—that is where the money has gone, and I am proud of that fact.

Sadiq Khan: May I invite the Minister to come and speak to one of the 6,000 people—my constituents and those of other south-west London Members—who have had endoscopies over the past year thanks to a £4.6 million new unit in St. George's hospital? Would he say to them that that £4.6 million could have been better spent or spent elsewhere?

Andy Burnham: Clearly, I would not do that. My hon. Friend is right to raise that point because the consequences of the Conservative party's policy of sharing the proceeds of growth would be to take money out of the national health service. Conservative Members do not want to talk about that, but that is clear from their position. My hon. Friend is right to cite a real improvement in people's lives about which we are deeply proud.

Several hon. Members: rose—

Andy Burnham: I want to make some progress, so I will not give way. We are 19 days away from the end of what I accept, and what everyone in the Department would acknowledge, has been a difficult year for the national health service. Painful decisions have been made, but it is clear to us that the NHS will be stronger as a result. The NHS has grasped the nettle on overspending, which has been tolerated for far too long. Despite that, and despite our having brought more rigour to the health service's financial system, key financial objectives will be met this year, and I will mention those in a moment. Key service standards will not be jeopardised, and as a result of the action taken, the NHS is in a much firmer position for the next financial year. It is building on a much stronger platform as a result of the changes made.
	Let me remind the House of the three clear objectives that my right hon. Friend the Secretary of State set for the national health service this year. The first is to deliver a net financial balance across the NHS as a whole by 31 March 2007, the second is to ensure an improvement in the financial performance of all organisations that reported a deficit in 2005-06, and the third is to achieve recurrent monthly run rate balances across as many organisations as possible by the end of the financial year. As we reported in our third quarterly report on NHS finances, the NHS has made considerable progress in delivering against each of our key financial objectives, and it remains firmly on course to end the year in net financial balance. In fact, taking account of the £450 million in savings that strategic health authorities have identified, overall, the NHS forecasts a year-end surplus of £13 million at the end of the third quarter of the year.
	On the in-year position for this financial year, when the impact of deductions for prior overspending is ignored, the NHS forecasts an in-year surplus of some £269 million. That is a remarkable achievement, and it bears witness to the hard work of NHS staff across the country who have sought to deliver savings, increase the efficiency of working practices, and reduce deficits.

Bernard Jenkin: The Minister is talking about getting the NHS into financial balance, but in paragraph 107 of the Select Committee report, the Secretary of State is reported as having
	"told us that overspending was concentrated in the 'healthier, wealthier parts of the country'."
	What did she mean by that, and what are the implications of that for Government policy?

Andy Burnham: The hon. Gentleman should look at the detail of the Select Committee's report. It is clear, as everybody acknowledges, that the overspending is concentrated among a minority of organisations, and they are predominantly in the east of England, London and the south-east. Those are facts.

Hugh Bayley: I thank the Department for the assistance that it has given north Yorkshire in getting to grips with its deficit. It is worth noting that in north Yorkshire, the waiting time for in-patient and out-patient treatment, as well as diagnostic tests, is less than the average for the region, but a number of GPs in York have pointed out to me that most of the PCT deficits are in rural or mixed rural areas. The Select Committee on Health examined the issue and called for the funding formula to be reviewed. The Government are reviewing it, but will they specifically consider the costs of providing health services in rural areas, so that the formula fully reflects those costs?

Andy Burnham: I can give my hon. Friend an assurance that we will. We keep the formula under constant review, and I will deal with some of the specific points that my right hon. Friend the Member for Rother Valley made in a moment.
	Our analysis shows that 82 per cent. of trusts and 69 per cent. of PCTs are forecasting an improved in-year position compared to 2005-06. As I say, deficits continue to be concentrated among a small minority of organisations. The great majority are in balance or better and continue to deliver service and quality improvements. On achieving run rate balance—that is the third of our key financial objectives for this year—I am pleased to say that a healthy majority of all NHS organisations reported a positive run rate balance in the third quarter. In fact, our analysis indicates that only a small number of organisations—some 17 of them—are not likely to achieve that objective by the end of March.

Michael Penning: rose—

Andy Burnham: I will not give way. I shall now turn to the points raised by my right hon. Friend the Member for Rother Valley and will deal with some of the important issues that the Committee raised. He began by mentioning the overall effects of RAB, or resource accounting and budgeting. If I heard the hon. Member for South Cambridgeshire correctly, I think that he began his remarks by saying that the Treasury must take responsibility for the effects of stopping planned support and for brokerage; he used that exact word. Am I right to take that as an indication that the Conservatives would not follow the disciplines of the resource accounting system?

Andrew Lansley: No.

Andy Burnham: Well, I have set out what the hon. Gentleman said. Let me quote the very beginning of the Select Committee's report:
	"There have been hidden underlying deficits for many years, but they were revealed by policy changes which increased transparency, in particular the switch in accounting procedures associated with the introduction of the Resource Accounting and Budgeting (RAB) regime. For example, as a result, it was no longer possible to underspend on capital expenditure and use the money to subsidise current spending."
	That system provided the transparency that enabled us to debate the issues as we have done today.

Paul Truswell: rose—

Andy Burnham: If I may, I should like to come on to the points that my right hon. Friend the Member for Rother Valley raised. He commented on the effect of RAB on NHS trusts; in our reply to the Committee's report, we said that we would look into the issue in detail. We said that, in principle, we accepted the logic of what the Audit Commission's report had to say about the effects of RAB as applied to national health service trusts. The resources needed to bring about a situation in which that issue could be addressed would have to be drawn from the NHS, but I can give him the assurance that, in principle, the Department accepts the logic of what he, the Committee, and the Audit Commission have said. We will say more in due course, as the financial year comes to a close.
	My right hon. Friend asked about top-slicing. He asked how much money will be paid back, and what arrangements would be put in place to make sure that it was paid back. Of course, under the logic of the RAB system, the money can be paid back as soon as financial recovery allows. The issue is how quickly all organisations in a particular region come back into balance and tackle overspending; that will allow the resource in the region to be paid back more quickly.

Kevin Barron: I am grateful for that but the Minister has highlighted that after the fourth quarter there may be an underspend of £270 million. We do not know that yet; there are a few months to go before we get the figures for that quarter. However, the third quarter report suggests that there could effectively be £300 million of underspend nationally. I am trying to probe the Minister on whether that amount will go to PCTs such as my local PCT, which has been top-sliced because of overspending in other areas. How will the money be redistributed, or will it be kept centrally, and then used to get rid of RAB?

Andy Burnham: I can tell my right hon. Friend that all organisations are in the process of finalising their financial plans for 2007-08.

Mr. Deputy Speaker: Order. I appreciate that it is difficult for the Minister when he is asked a question by someone who is behind him, but he must address the Chair.

Andy Burnham: I apologise, Mr. Deputy Speaker. I was about to say to my right hon. Friend that we made it clear in the operating framework for the coming financial year that strategic health authorities will not generally require contributions to the SHA reserves of the scale seen in 2006-07 because of the NHS's return to overall financial balance this year. It is because of the steps that we have taken to return the NHS to that balance that we will not require such a top slice to be taken next year.

David Taylor: Does the Minister accept that in pursuing a financial balance, decisions and actions can be taken that make perfect financial sense, but are economically illogical? For instance, if the mega-doughnut around the city of Leicester places a veto on a particular practice in the north of the county, and it prevents Derbyshire royal infirmary from receiving referrals for elective treatment for a two-month period towards the end of the financial year, the DRI, which would otherwise have provided that treatment, lies partly idle for want of those referrals. That is not economic sense, is it?

Andy Burnham: What makes sense for the NHS as a whole is to ensure that it does not have loose priorities. The hon. Member for Harrogate and Knaresborough (Mr. Willis), for whom I have great respect, said that we should aim to achieve a financial balance, but that it should not be the be all and end all. However, it is crucial for the future stability of the NHS that in the system there is rigour and discipline that perhaps have not been evident in the past.

Michael Penning: Will the Minister give way?

Andy Burnham: I shall give way to the hon. Gentleman in a moment. That is the best way to serve all health economies in the long term. It does not help the NHS in the long term to take a lax or loose approach to those matters, because the problems will come back and hit either that health economy or a different one in years to come. One economy would have to put its plans on hold while another economy came back into balance.

Michael Penning: I thank the Minister, and I shall not hold it against him that he has given way to his hon. Friends and colleagues, some of whom have not been present for the entire debate. He talked quite rightly about priorities in the funding stream. West Hertfordshire NHS Hospitals Trust has a brand new, 18-month-old birthing unit that taxpayers paid for. That important unit has been closed. We have an award-winning cardiac unit—cardiac health is a Government priority—that is going to close. There is a stroke unit—strokes are another priority for the Government—that is going to close. How does that bring health care to my constituents?

Andy Burnham: At the beginning of my contribution, I gave the figures on relative health improvement in the country, which has taken place in all constituencies. If the hon. Gentleman claims that that is not the case in his constituency, I can tell him that there has been huge improvement and that his constituents can look forward to a maximum 18-week wait from GP referral for treatment by the end of 2008. Decisions have to be taken to balance expenditure on the ground, which sometimes means that services have to be changed. If he considered the outcomes in his constituency, I hope he would agree that waiting lists are at their lowest-ever level, and that the NHS's service to patients is as good as it has ever been.

Phil Willis: Will the Minister give way?

Andy Burnham: I should like to make progress, because there are some serious issues that my right hon. Friend the Member for Rother Valley and others have raised. I have accepted a number of interventions, and I wish to deal with education and training.
	My right hon. Friend the Member for Rother Valley asked what the service level agreement between strategic health authorities and the Department means. We believe that is right that at SHA level there should be flexibility to manage the future work force needs in any region, and that is precisely what the service level agreement will require. In making decisions about centrally allocated budgets, provision must be made to plan for the medium and long-term work force needs of that particular area. The hon. Member for South Cambridgeshire asked me whether I could confirm that there would not be any take from the 2007-08 education and training budget. I turn the question back on him: how will he square an independent NHS, where all supposed interference will allegedly disappear, with his plans to take all the decisions out of the hands of politicians? We will put decisions in the hands of the strategic health authority, but we will require it to plan for the medium and long term.
	My right hon. Friend the Member for Rother Valley asked about vulnerable services. He is right that in the past, the casualty of NHS budgeting was more vulnerable services such as mental health— [Interruption.]—or learning disability services, as the Minister of State, Department of Health, my right hon. Friend the Member for Doncaster, Central (Ms Winterton) says. It is precisely because of the transparency of the regime that such a situation will not be tolerated in future. It will not be possible for the budgets for services to some of the most vulnerable people in our society to be raided to backfill deficits elsewhere. That is another virtue of the—

Several hon. Members: rose—

Andy Burnham: I am afraid that I must conclude, because I have taken too much time.
	I should like to do justice to some of the points that have been made in our debate. My right hon. Friend the Member for Rother Valley asked about planning for surplus. It is obviously better to plan for surplus than to plan for break-even and just miss, but we will soon provide more details about the issue that he raised—giving people incentives to carry over budgets from one year to the next—and I hope that he will be reassured when we do so. I have taken more time than I planned, but it is important that I deal with a couple of points that several Opposition Members made. Many hon. Members raised the funding formula, and sought—I believe—to attribute problems in some parts of the country to the issue. On several occasions, that conclusion was ascribed to the chief economist in his evidence to the Health Committee, but he did nothing of the sort. Indeed, backing up the Department's view, he said that there is no single simple cause of deficits in the health service, nor is there any single simple way of dealing with them.
	As for the question of the funding formula, the hon. Member for South Cambridgeshire and his hon. Friends asked why we should have proxies for health care need, and suggested we use direct measures of health care need measures such as age, but why is age anything other—

Graham Stuart: I said it was a proxy.

Andy Burnham: The hon. Gentleman should read the letter that his hon. Friend the Member for South Cambridgeshire sent me, in which he said that the Conservative position is to allocate resources in the health service according to "burden of disease". A key driver would therefore be age. The hon. Member for Beverley and Holderness (Mr. Stuart) has just accepted that age is a proxy of need, not a real driver of need. On several occasions, I have put it to the hon. Member for South Cambridgeshire that there are much clearer measures of the burden of disease in the NHS, such as those that I listed at the beginning of the debate, including the mortality rate per 100,000 of the population under 75 from cancer, coronary heart disease and stroke, and the prevalence of diabetes in under-75s throughout the population. Those are measures of the burden of disease.  [ Interruption. ]

Mr. Deputy Speaker: Order. We cannot have these continual interruptions from a sedentary position. If hon. Members want to intervene, they may attempt to do so, but they are disrupting the debate.

Andy Burnham: When one questions, probes and pulls at Conservative party policy, it is interesting to see just how defensive Opposition Members become. They realise that the consequence of the policy of allocating resources according to the burden of disease, as stated in the policy document issued at last year's Conservative party conference, if the hon. Member for Beverley and Holderness remembers that, is to take more money out of his hon. Friends' constituencies. All the bleating that we hear about the funding formula does not fit with the Opposition's party policy on the allocation of health resources. On top of that, money will be taken from the health budget by pursuing the policy—

Graham Stuart: rose—

Andy Burnham: I shall not give way, because I am about to finish my remarks. If we couple that policy with the effect of sharing the proceeds of growth— [Interruption.] If the hon. Member for Hemel Hempstead (Mike Penning) believes that his constituency will be better off under that policy, I am afraid that he is sorely mistaken.
	We have had a good debate. As I said at the outset, we accept much of the Select Committee's logic and many of its recommendations, and it can take heart that the Department has taken action to address some of the matters raised by my right hon. Friend the Member for Rother Valley. As a result, the NHS is in a much firmer position from which to address the next two years so that, by the end of 2008, we will be on course to deliver a maximum 18-week wait for treatment after GP referral. That is a huge achievement, and it is a complete vindication of the changes that the Government have made to cut waiting lists and improve the service that the NHS offers not just to the constituents of Government Members but to the constituents of every single Opposition Member. The Opposition did not make any acknowledgement of the improvements in the health service in their constituencies, but we are proud of those improvements, and we will continue to invest in the NHS which, we can now say with absolute clarity, can proceed from a position of financial strength.

Kevin Barron: With the leave of the House, I thank Members in all parts of the House who have taken part in the debate, particularly the five members of the Health Committee—or rather, four members; the hon. Member for Peterborough (Mr. Jackson) was not with us when we agreed the report on the national health service deficits. Their work over the weeks and months has contributed to today's debate. Although it got rather noisy towards the end, as debates tend to do, it was a welcome attempt to explain what has happened in the funding of the national health service and why, over the past 18 months, the overspend has been greater than in the preceding 50 years. The transparency of the examination of NHS expenditure has highlighted that.
	I told the hon. Member for South Cambridgeshire (Mr. Lansley) that the criticism of the report explaining the NHS deficit was not fair. The document is available on the web and the six points by the Government's main adviser in the executive summary are worth reading. It goes much further than the Health Committee did in examining the current deficit, as it was written by people inside the institution who have access to more information and more time than we had.
	The document highlights problems in many areas, such as productivity issues. Because there is extra money coming into the system, more people can carry on with what they are doing, as opposed to being asked to get more out of the available funding or to achieve better outputs from increased funding. Anybody who is interested in NHS deficits should read it.
	In their response, the Government take into account some of the blindingly obvious problems that we identified in the NHS. I hope the service level agreement in relation to education and training will be published, so that everyone, including strategic health authorities, understands what is expected. I should warn my hon. Friend the Minister that later this week we hope to agree a report on work force planning, so we may return to several of the matters that were covered in the debate.
	My hon. Friend said that it was likely that third quarter publications would not reveal the overspend predicted at the beginning of the financial year, and consequently that there would be some moneys in the system that are not needed to match the overspend. I, together with other members of the Committee and other Members of the House, will be watching carefully what happens to that money between now, the end of the financial year and the beginning of the next financial year.
	I am pleased to hear my hon. Friend say that he does not expect the top-slicing exercise to be as large as it has been in this financial year. I hope not. In my constituency top-slicing has not taken up the growth money that was put into the system, so it has not hurt services at this stage. The reason for budgets of the level that we get in south Yorkshire is the health inequalities that we face, so it is important that that is recognised.
	I welcome the Government's attitude to the funding formula. In autumn this year we should find out whether rurality is a big issue and whether it should be addressed. I look forward to a debate on estimates that covers the wider issues of our work as a Committee and the work of the national health service.
	 Question deferred until Ten o'clock, pursuant to Standing Order No. 54(4) (Consideration of estimates &c.).

Local Transport

[Relevant Documents: The Twelfth Report from the Transport Committee, Session 2005-06, Local Transport Planning and Funding, HC 1120, and the Government's response thereto, Fourth Special Report, Session 2006-07, HC 334.]
	 Motion made, and Question proposed,
	That, for the year ending with 31st March 2007, for expenditure by the Department for Transport—
	(1) further resources, not exceeding £849,010,000, be authorised for use as set out in HC 293,
	(2) a further sum, not exceeding £533,764,000, be granted to Her Majesty out of the Consolidated Fund to meet the costs as so set out, and
	(3) limits as so set out be set on appropriations in aid.— [Claire Ward.]

Gwyneth Dunwoody: The best kind of partnerships, whether they are social, sexual, economic or political, are those in which people talk to one another, and occasionally listen to the response. Considering how many millions of people there are in the world, these partnerships are not easily found, and not usually in politics. My Committee felt that it was time that we looked carefully at the partnership between the two groups of people who have to develop and deliver transport policy.
	It is important to say at the outset that the Government are one of the first for a very long time who have committed themselves to developing a transport policy. They have put large sums of money into various aspects of transport. If I am not always pleased with the result, that is because, unlike the pope, my Government do not seem to be infallible. When one looks at the work of our Committee, it is essential to understand what we are saying. Governments can set transport strategies, and indeed they do. Governments can provide the budgets, and indeed they do. What Governments cannot do is deliver. The people who deliver the local transport plans are, by definition, local. It is not exactly a difficult thing to understand, but it is crucial.
	Our Committee decided to look at the way that the local transport plan framework had been introduced, and we decided that it was an improvement on the former system. We said that it had achieved quite a lot. However, because local authorities have to deliver many of the targets, it is essential to examine the performance. It does not matter how good the intention—where is the performance?
	We decided that there is always a particular tension between central and local government. The Department for Transport looks to local authorities to implement improvements but—let us be straightforward about this—it does not have a hands-off attitude. It sets the national priorities, it reviews and it scores, because that is the modern way of government. We all have to have our report cards, Mr. Deputy Speaker, even you or I. The Department awards capital funding for the integrated transport bloc and it decides on the balance between capital and revenue funding. It then decides which major transport schemes will be funded by central Government.
	None of this is reprehensible or difficult to understand. The problem arises when, for one reason or another, that partnership begins to get slightly out of kilter. One could say that with that set of objectives, no local transport plan is, in effect, local. It is centrally decided and locally implemented, but the strategy, the money and the determination come from the Department for Transport.

Mark Pritchard: Although I agree with the hon. Lady, does she agree that there is also the dynamic of the Office of Rail Regulation and Network Rail in relation to train services that are delivered locally, whatever the strategy of central Government? For example, in my constituency we want a new direct rail service from Shropshire to London, starting in Wrexham. Although the local authorities support it and, I understand, the Government support it, the Office of Rail Regulation and Network Rail are making it very difficult for that scheme to be developed.

Gwyneth Dunwoody: The hon. Gentleman will forgive me if I do not wreck my entire career by getting involved in the politics of Wrexham. That was a lesson that I learned very early on and it is not something that I am likely to forget. Indeed, the Welsh Assembly Member for Preseli Pembrokeshire is likely to make known her views on the expenditure on transport from that Assembly without any help at all. One Dunwoody on the subject is quite enough.
	We ought to accept that the guidance from the Department for Transport does not indicate what weighting is to be given to success in delivering against locally identified priorities. If there is to be a local transport plan, it must have clear local input. The Government have not yet told us how they weight their response. How do they judge the things that are important? The Government response said:
	"The Department has not yet issued guidance on how the delivery of the second Local Transport Plans will be assessed, but has announced that it will not assess delivery until 2008 at the earliest."
	The difficulty is that local authorities do not have that much flexibility. They must know at an early point what is going to happen to their local transport plan. Although they have their own objectives, they need to know what the Government think is a priority. They also need to know clearly where the money is coming from.

Andrew Selous: My constituents are beginning to think of local transport planning in my area as a sick joke. A previous Secretary of State for Transport announced that a key bypass would be built in 2003. I heard from the Highways Agency only a few days ago that it is not likely to be built until 2016. Does the hon. Lady think that things have come to a pretty pass when there is a 13-year delay on a road that a Secretary of State has announced will be built?

Gwyneth Dunwoody: We can all play the constituency game and say, "I haven't got everything I want on my particular wish list." A previous Government got their transport policies into one great mess because they promised everybody that they would get everything on their wish list and then ensured that there was never any money to achieve it. I am not going to play that game. I happen to think that we should be looking seriously at the problems that local authorities face to see how we can help to sort them out.
	The Committee said that it was unacceptable that local authorities were penalised for pursuing regeneration and job-creation schemes. We stated:
	"The Department should make it clear local authorities can prioritise specific local transport needs, such as economic regeneration, and then give them proper weight".
	How did performance against local priorities influence the local transport capital settlement for 2007-08? Will the Government confirm that local authorities will be rewarded in their local transport planning scores for performing well against local objectives of regeneration and job creation? When it comes to comparing performance between various authorities, as every authority has some differences from its next-door neighbours, can we know exactly what local transport needs, targets and objectives the Department is using in allocating funding according to performance against local targets? Those things will make an enormous difference.
	We said that the Minister had told us that the
	"second round guidance was less prescriptive than the first".
	However, after the Government response was published, the roads performance division within the Department wrote to 10 urban areas covered by the urban congestion target and said that if they wanted to submit "congestion delivery plans"—this Government are so clunky in the titles they choose that one would think they were Liberals—they could then have them assessed and payments would be awarded from a £60 million congestion performance fund over four years. Do these congestion delivery plans required of the 10 largest urban areas add another layer of planning and assessment, or are they a completely new approach? It would be helpful if we were told.
	We looked carefully at capital funding and said that although the Department had told us it agreed with
	"the principle of applying proportionality in the assessment of scheme bids",
	we were not at all clear what proposals were going to be implemented to make that a reality. There must be some, and it would be helpful if they were stated transparently and clearly.
	We considered the whole question of bidding. It is time to understand that a lot of the processes not only cost a great deal in terms of a local authority's time, but they also cost money. If we assess the amount of work that goes into bids, it is clear that unsuccessful bidders, as well as successful bidders, are spending a considerable amount. Is the Minister going to tell us that the Department has got a target to reduce bidding time and costs?
	The Government also said that they were going to give final guidance on major scheme funding, including sharing scheme development costs, in early 2007. When will that appear? Please can we have an idea of what it will say about streamlining the bidding process and reducing the costs for local authorities? We have had enough bidding processes for us to make those assessments. Surely it is time that local councils were given the right support at the right time to enable them to make sensible decisions on whether they should continue with a bid if it is painfully clear—we were told this again and again in evidence—that, for one reason or another, the bid from a particular authority for a scheme that it regards as important is not going to be successful. Someone should tell local authorities at a reasonably early stage why a bid will be unsuccessful and on what basis that decision has been made. They should be told to begin to rethink their plans and not be allowed to continue at considerable expense and with considerable difficulty.
	I come to our old friend, the private finance initiative. The Committee said that if PFIs are not appropriate for transport, the Department should consider making the funding available through other forms of procurement. Sometimes there is a commitment—almost an ideological commitment—to the idea that only by using private finance schemes can Government policies become a reality. Frankly, not only is that totally difficult to understand, but in transport matters it is transparently untrue. Most of the PFI schemes that are operating—whether in railways or other forms of transport—have not produced the results and are making a lot of money for a lot of people without a lot of effective results.
	The Committee looked at the Department's decision to introduce a transport innovation fund, which will override the four shared priorities agreed between central Government and local authorities. The response did not give us any clear justification for that decision. Perhaps the Minister would like to explain how the national objectives in terms of congestion and productivity will be included in the transport innovation fund.
	I have no intention of taking time that should go to other Back Benchers, but it is important to say one or two things. We know that the Government are striving not to break their fiscal rules, but because of that local authorities frequently face the difficult conundrum of how they should balance their finances between revenue and capital, and how they are going to sustain the new transport schemes that many of them are introducing.
	As the example has been set, I want to refer to what is happening in the bus scheme in Cheshire. It is an excellent scheme. It has great support and my constituents are highly delighted with it, but the counties have not received support for administering that highly complex and rather difficult scheme. Given the constraints of Gershon and the other problems that have been put on local authorities, it is clear that there is a cost in administering the scheme which has not been allowed for or even properly planned for. Indeed, the differences between one area and another mean that some local authorities receive rather more financially than they had expected and some receive rather less. Local councils have found it almost impossible to pool those resources and to work together, which has put an even greater strain on the services. That cannot go on year after year. If costs are constantly taken out of local authority finances, those costs will become plain and will not only produce a shortage of revenue, but hinder the use of prudential borrowing by local authorities because they cannot service the debt.
	The Transport Committee felt that not only had the Government got an excellent set of priorities, but they wanted to deliver those services where such services count most. What therefore upset us was that we felt that the guidance did not contain sufficient transparency, clarity or even evidence of exactly what the Government wanted local authorities to achieve. Yet again, I return to the point that it is a partnership between the Government and local authorities. Perhaps that partnership is uneven—it may be like the partnerships that one finds in medicine and legal affairs, where the senior partner gets the money and the junior partner does the work—but at some point it is nevertheless essential that the Government make their plans crystal clear. We cannot expect locally elected councillors not only to undertake responsibility for planning complex schemes and prioritising their interests, but to take the blame when the money is not available for schemes that have been promised. It is essential that the Government back up their extremely good intentions with a little more clarity and, dare I say it, a little more plain speaking. Ministers can do it, and it is about time that they got into the habit.

Alistair Carmichael: It is a pleasure to follow the hon. Member for Crewe and Nantwich (Mrs. Dunwoody). Her speech was a fair reflection of the report produced by her Committee. I commend the Committee for the report, which is as cogent as it is comprehensive—she has done the House a service. However, her reference to clunking titles and Liberal Democrats was a little gratuitous, but in view of the fact that some in my party have had worse maulings at the hands of the hon. Lady, and in view of a certain fondness in which I hold her, I will not pursue the point.
	The overall picture that emerges from the report, and from the Government's occasionally thin response to it, is one of an increasing tension between transport planning at the centre and transport planning at the local level, particularly at the local authority level. Such tension is not a bad thing per se—the right balance of tension can be creative—but the picture that emerges from this report, which has been confirmed by my experience of visiting different parts of the country, and dealing with different local authorities in different areas, is one in which the relationship between the centre and the local level has got so fundamentally out of kilter—the term used by the hon. Member for Crewe and Nantwich—that the tension is not creative, which is influencing how many local authorities, passenger transport authorities and passenger transport executives approach transport planning. We are seeing a disturbing lack of boldness, radicalism and innovation, which is to the detriment of the potential of the local transport planning structure.

Mark Pritchard: Does the hon. Gentleman share my concern that although the input of regional assemblies is often well intentioned, it can sometimes confuse the line of communication between local communities, local authorities and the centre?

Alistair Carmichael: I do not know whether the hon. Gentleman has a specific instance in mind, but I can see how that might happen occasionally. The approach should be based on "horses for courses". In some areas on some issues at some times, there will be a role for the regional assemblies, but that will not always be the case. Yes, I share the hon. Gentleman's concern that occasionally we seem determined to involve everyone, apparently for the hell of it. The difficulty that causes a lot of disillusionment for many local authorities is that, as the report confirms, they have responsibility without power.
	I want to deal with a few issues that the hon. Member for Crewe and Nantwich mentioned in the course of her remarks.

Bob Spink: Before the hon. Gentleman moves on, does he agree that one of the causes of disillusionment among local authorities is that they cannot trust the Government not to keep changing their plans? In the Thames Gateway, for example, the Government target for the number of houses to be built is being increased, but infrastructure investment is being delayed, which is damaging both the public and the local authorities' ability to do transport planning. Does the hon. Gentleman agree that the infrastructure should go in before the houses are built?

Alistair Carmichael: I commend that general approach. The Department for Communities and Local Government is a relatively young Department, but there is greater scope for some joined-up thinking and joint working between it and the Department for Transport. The social consequences, never mind the economic, congestion and environmental consequences, of not putting in the transport first and letting the other developments follow are obvious for all to see. If we have learned nothing else since the 1960s, when that approach was specifically disavowed, we should at least have learned that much.
	As the hon. Member for Crewe and Nantwich said, this should really be a Back Benchers' debate, but I want briefly to touch on the following areas: first, the departmental guidance on the preparation of local transport plans; secondly, the operation of the transport innovation fund; and thirdly, the strengthening of passenger transport authorities and passenger transport executives.
	There could not be a more unambiguous statement of the situation that local authorities face than paragraph 31 of the report:
	"If Local Transport Plans are to adequately reflect local objectives, the guidance and the scoring methodology must be rewritten to support it, and the way local and national priorities are weighted should be available to councils. It is unacceptable that local authorities are effectively penalised for pursuing regeneration and job creation schemes. The Department's Local Transport Plan assessment should make it clear that local authorities can prioritise specific local transport needs, such as economic regeneration, and that those priorities will be given proper weight. That said, it is incumbent on local authorities that wish to emphasise local transport priorities to be bolder in pursuing their objectives."
	I have always been of the view that transport exists as a service to underpin and reinforce Government policy in other areas. Social inclusion is one of the greatest opportunities, particularly when it involves a bus service, and economic regeneration and economic development is another. That relates to the point made by the hon. Member for Castle Point (Bob Spink) a few minutes ago. The inability to integrate transport planning into other policy areas is one of the biggest failings, and it is one of the biggest frustrations for many people in local government today.
	The final point in paragraph 31—
	"it is incumbent on local authorities that wish to emphasise local transport priorities to be bolder in pursuing their objectives"—
	is absolutely true, but we must recognise that such failures often stem from the almost siege mentality that now exists in many local authorities as a result of the constant battering at the hands of central Government.
	Turning to the measurement of local transport plans, the Committee should be commended for its work in that area. Paragraph 36 states:
	"It is wrong that local authorities are measured against targets over which they have no direct control, such as bus satisfaction or passenger numbers. Either local authorities need direct control over these services; or they should not be held responsible for them."
	That is an irrefutable conclusion. I am delighted that this is something of a work in progress, now that we have the Government's White Paper on reforming bus regulation. If what is produced at the end of the process strengthens local provision, and in particular local accountability, I would certainly be prepared to support it.
	On bus regulation, the Committee's comments at paragraph 177 on the strengthening of the powers of passenger transport authorities are particularly pertinent to the metropolitan areas, because those are the areas where there has been the greatest failure in the deregulated bus market, and it has ceased to operate effectively. Allowing for more powers and meaningful resourcing of passenger transport executives and passenger transport authorities must lie at the heart of developing the Government's bus policy. The deregulated system has worked well in some places—I think of Brighton, Harrogate, York and Cambridge—but that is because they are towns and cities of a certain size that have the critical mass of population to be able to make the integration of partnership working effective. In areas such as Greater Manchester, for example, it is pretty clear that that has not been the case. I should place on record my appreciation of the work of the Greater Manchester PTA, which is among the most effective of the authorities with which I have come into contact since I took on this brief. Particular credit goes to the Labour chairman, who has been assiduous in bringing the concerns of his organisation to Government.
	On the transport innovation fund, I agree with the hon. Member for Crewe and Nantwich that we can all welcome the significant injection of funds that it represents. However, in paragraph 116 the Committee makes pertinent comments about the way in which the transport innovation fund threatens the very concept of local transport planning:
	"The Transport Innovation Fund is not in any way about local choice or local schemes but about central government transferring its risk to local councils for what are schemes of national importance. It is not about innovation; it is about central control."
	I fear that the transport innovation fund might eventually defeat the Government's own policy, particularly on congestion. A patchwork of pilot schemes designed to tackle congestion might be difficult to bring together thereafter and to marry into one national scheme. I think that pilot schemes are emerging because that is the only show in town as regards local authorities getting money for transport innovation. We might be left with a series of areas where action to tackle congestion proves to be unpopular because it is seen as an extra charge. That could put at risk instead of encourage the creation of a national scheme, which everybody who is serious about tackling congestion should accept.
	The House will soon consider the national concessionary bus travel scheme, which has already been dealt with in the other place. I am keen that we should all be able to unite around that scheme, which my party, in co-operation with the Labour party in Scotland, has been able to implement and to promote. My concern about the way in which it has been handled in the other place so far is that we risk taking an idea that everyone supports and implementing it in such a way that it will end up offending most people. Trying to fund a scheme as a bolt-on to the local government settlement is setting it up to fail.
	Hon. Members will be aware that the basis on which local authorities are given their financial settlement every year is byzantine to the point of opaque, and has little to do with bus ridership in their areas. Significant numbers of local authority areas will struggle to finance the scheme because the funding has been given in such a way. I hope that when the Bill comes before the House the Government will look again at how the scheme will be funded and that they will take seriously the opportunities presented by a nationwide smartcard scheme, for example. That would be the best way of relating the money that goes to councils for the provision of services to their actual use. Failure to do that will mean that a significant number of areas, particularly in coastal and resort towns, will suffer, which surely cannot be an outcome that the Government intend.

Graham Stringer: It is important to put the debate about local transport planning and funding into context. With the best will in the world, any Government, of whatever colour, would have difficulty in operating the current arrangements between local democracy and central Government. The arrangements were arrived at, after a lot of confrontation and argument, in the mid-1980s, when the metropolitan counties were abolished, bus services were deregulated, and the poll tax was introduced and replaced by the council tax. That ended up with many public services not being controlled by directly elected local councillors, and where councillors did have control, it was over only a tiny percentage of their income, with the Government controlling the rest. That obviously puts some obligation on the Government to ensure that the money is spent sensibly. That is not the right balance, and it makes things difficult. I hope that Lyons gets it right and that after the ongoing reviews we will end up with a better balance between central and local government.
	I do not believe that there is another country in Europe where, if cities the size of Manchester, Leeds, Southampton and Nottingham wanted to control their buses and invest in tram systems, their central Governments could or would stop them, but that is the situation that we face. Some of the greatest cities in Europe cannot determine whether they have tram systems. That cannot be a satisfactory arrangement.
	The Committee therefore first considered the context and interviewed Michael Lyons. Having done that, we considered the position as it is. We asked whether the relationship between local transport plans and central Government was the right one, and whether it functioned effectively, efficiently and economically. When we took evidence, council after council, expert after expert and councillor after councillor answered no. They said that the system was burdensome, costly and inefficient, and that they did not feel that they were in control of their local priorities.
	A measure of the extent of central Government control or interference is that schemes costing more than £5 million are determined by central Government. One of the Committee's minor recommendations was to increase that figure to £10 million and to provide for applying a light touch and light regulation to schemes of £20 million. I thought that the Government would leap at that and say, "Of course. These are trivial figures. What do officials know about such expenditure in local areas?" The answer to that is, "Almost nothing." However, the Government have effectively deferred making a decision in their response.
	Government decisions at micro level are not good. Let me give two local examples of Government officials forcing bus lanes on my constituency. Most of us are in favour of bus lanes and bus priority, but to achieve the right scheme the right debate must be held between local interests, such as shopkeepers, people who use the buses and bus operators; everybody has to have a say. Bus lanes were forced on the constituency in Cheetham Hill road and Bury Old road. Officials said, without examining the details, that if we did not accept the bus priority schemes we would not get money for other matters.
	There were two consequences. First, 18 months after bus priority was accepted, a big sign went up at the top of Cheetham Hill road to tell people to beware because 75 accidents had occurred on the road in the past year. That happened because the scheme was forced and badly planned. Secondly, as was said in the recent bus debate, just as the buses have been given greater priority in a deregulated system, the bus network has contracted. In a micro sense, that is what central Government control does to local priorities.

Paul Truswell: Is not there a danger in the otherwise welcome proposals in "Putting Passengers First", to which the hon. Member for Orkney and Shetland (Mr. Carmichael) referred, that we might go even further down the wrong track through the decision-making process outlined for quality contracts? Under it, the current system would be delegated to an unaccountable and unelected set of traffic commissioners, with an appeal to the transport tribunal. Even the democratically elected element of the current system—the Secretary of State—would be removed from the new set-up. Would not that take us even further down the path that my hon. Friend describes?

Graham Stringer: My hon. Friend makes a pertinent point. I do not want to say any more about buses, but I agree that although the recognition in the White Paper that the current system is working is welcome, some of the proposals in it could put more hurdles in the way of passenger transport authorities and local authorities trying to regulate buses than the previous system did.

Gwyneth Dunwoody: I apologise for interrupting my hon. Friend, but I do not want him to give the impression that traffic commissioners are not part of a protection. Indeed, if they had more power to monitor bus companies' day-to-day decisions, the quality of bus services might be much better.

Graham Stringer: I thank my hon. Friend for that intervention. Traffic commissioners are badly underfunded. If they had more resources, there is no doubt that their impact, even on a deregulated system, would be positive. I hope that in response to my hon. Friend the Member for Pudsey (Mr. Truswell) I was making the different point that however good they are at examining the current system, they are unelected. There are also other hurdles in the White Paper that might be difficult to overcome.
	There is a completely different system in London. The balance of funding between the rest of England and London has changed from roughly 50:50 to 60:40 in London's favour. That has been done without being explicitly stated, and I would be grateful if the Under-Secretary of State for Transport, my hon. Friend the Member for Lincoln (Gillian Merron) could justify it. When we ask the Secretary of State, the reply is always that London is different. London is no more different now than it was 10 or 15 years ago. It is special, as are many cities in this country.
	My hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody) has already referred to other contradictions. Three sets of priorities sit on top of local schemes. There is the interference—as I would characterise it—of the regional transport plans, which are sorted out in a vacuum by people who are not directly elected. There are the local schemes, with priorities that have been agreed between the Government and the Local Government Association. Those for local transport schemes are congestion, access to public transport, safety and reduction of pollution.
	I believe that every local authority representative who has come before the Select Committee and been asked the question, in this inquiry and in others, has always said that they wanted regeneration to be a priority. Clearly, there are conflicts between the set priorities and what most councils—particularly those representing deprived areas—want, which is to regenerate their areas, create jobs and bring wealth and prosperity to the people whom they represent.
	On top of that is the transport innovation fund system. As the report says, it is a centralising system with two priorities, one of which is to relieve congestion and the other is to improve economic performance. Those are all central controls and they contradict each other. Last Tuesday, when I asked the Under-Secretary of State for Transport, my hon. Friend the Member for Lincoln to explain what a TIF bid meant for Greater Manchester, I was, in a sense, not surprised when, as I went through aspects such as the regulation of buses, tram system funding and control over trains, she said that it was "quite a shopping list". It is exactly the same sort of control that obtains in London, but at the end of her reply on 6 March last week, the Minister said that "local solutions" were "the right way forward". I agree, but when central Government are effectively imposing on people an extra tax of potentially more than £2,000 in real terms, we need to know what the public offer is.
	Is it or is it not the Government's intention under the TIF proposals to fund the whole of the Metrolink scheme, as approved in 2000? When we asked these questions, and in response to our report, the Select Committee was told—I refer hon. Members particularly to point 22 in the response—to see the Government's consultation document on light rail and its improvement. Of course, when the Government recommend something like that, I immediately respond and look at it.
	Given that Ministers have regularly said that they are committed to light rail schemes, will the Under-Secretary explain why that document was a year late? Since April 2005, and in our report on light rail, we asked what excuse there was for that document to be a year late. How many officials were reprimanded? Was it a change of Government policy? Are Ministers going to tell us why the report was a year late? Is it because they have no commitment to Metrolink? I would like to know. One Minister asked me why I thought officials in the Department for Transport were against light rail, so this is one of the reasons.
	When I read the report—I advise my colleagues on the Select Committee to read it—I found that it was written in such a biased and unfair way that its clear objective could be only to damage light rail, not to respond to the needs of local people. The report carries on by saying that light rail is not always the best alternative. Of course not; sometimes buses are the right alternative, but in many cases light rail is. Does the report say what the benefits are? No, it is completely silent about them. It does not explain that the only real example of "modal shift" as the experts call it—people leaving their cars at home and using public transport—is Metrolink, which has an impressive record on regeneration and air quality. There is no response in the report on capacity issues, either.
	If we really want to get more people to use public transport, we need to provide the capacity. Sufficient evidence has been given to the Government and to the Select Committee that, even if we took all the cars off the roads in areas such as the west midlands and Greater Manchester, there would not be the capacity for people to change to public transport. We would have to increase that capacity and, in the case of Greater Manchester, that would best be achieved by using Metrolink. Why is that not mentioned in the report? I look forward to hearing the Minister's reply, but I can only draw the conclusion that officials and Ministers are anti-Metrolink. That is why I want to know whether the Government are going to fund Metrolink if congestion charging is brought in. Why is the contribution to Metrolink and the tram system 25 per cent. at the start and not 10 per cent., as for other major schemes? That shows bias against the systems.
	Possibly the most worrying statement in the consultation document is that there is apparently a problem with giving state aid to tram systems. This appears in paragraph 7.45 of the document. It is unexplained, and no distinction is drawn anywhere in the report between new tram systems and existing ones that might be extended. I understand the statement to mean that the Government envisage a legal obstacle to investing in trams because it would create unfair subsidised competition with buses. If that is the case, the report should have taken more than two sentences to explain it. I would be grateful if my hon. Friend the Minister would explain whether there is a European competitive hurdle to be overcome before we can reinvest in trams. Has the position changed in the past few years? Several tram systems have been brought on track recently, including those in Nottingham, Manchester, Sheffield and the west midlands. Has something changed, or has this obstacle been thought up by unhelpful officials?
	Many of the transport problems in this country were caused by the Tories over 18 years ago—

Graham Stuart: Of course!

Graham Stringer: Of course. The problems result from deregulation, under-investment, and the privatisation of rail. Having said that, I am also going to say something nice about the Conservatives. I do not often do that, so I have to put it in its real context. From the abolition of the Greater Manchester metropolitan council in 1986, which left no expertise on the new passenger transport authority, under a Conservative Government it took five years from the planning stage for the Queen to come and open the tram system in Greater Manchester. The applications for the extension of Metrolink have been in since the start of this Government. The Deputy Prime Minister gave his authority for Metrolink to go ahead in 2000. It is now 2007, and we are getting documents—a year late, according to the Government's own timetable—that directly inhibit progress. That is completely unacceptable, as far as I am concerned.
	I have talked a lot about trams, but there are two other schemes in Greater Manchester that provide an example of how the system is slow and fails to meet local priorities. The A57/A628 bypass round Mottram, Hollingworth and Tintwistle was agreed after public consultation in 1993. Tameside council wants it, Greater Manchester wants it, and there is no alternative. It has been through a whole series of reassessments under the previous Government and this Government. According to the latest projections, however, the earliest date by which it is likely to be completed is 2012.
	The other example is the Leigh guided busway. I have already talked to the Minister of State, Department of Health, my hon. Friend the Member for Leigh (Andy Burnham), about this matter. In a way, he is a good exemplar of the lack of understanding of what is local and what is national. Last Wednesday, I was in a very happy mood, having voted to abolish the other place. I was sitting down in the Strangers Bar to watch Manchester United go through to the next round of the European cup, when along bounced my hon. Friend. I was sitting with Councillor Roger Jones, the chair of the Greater Manchester passenger transport authority, whom the hon. Member for Orkney and Shetland (Mr. Carmichael) has already mentioned. My hon. Friend the Member for Leigh asked, "Where's my guided busway?" He should really ask his ministerial colleagues in the Department for Transport why a £26 million scheme that was agreed seven years ago and has had three public consultations—for planning, and under the road traffic legislation and the Transport and Works Act 1992—has still not been approved. The scheme is very pro-public transport and anti-congestion, and I hope that my hon. Friend and the people of Leigh get it. He should not, however, harass the chair of the passenger transport authority; he should harass my hon. Friends the Transport Ministers.
	The report shows that even in the context of the present local government settlement, the balance between central Government and detailed interference in national priorities, which sometimes has perverse effects at a local level, is wrong. The Government need to take more notice than they have done of the Transport Committee's report.

Robert Wilson: It is a pleasure to follow the hon. Member for Manchester, Blackley (Graham Stringer), who has great experience of local government and was one of the authors of the Transport Committee report.
	I was not going to speak in tonight's debate, as I have spoken in so many other transport debates over the past 18 months. I remembered, however, that transport planning and funding wind up my constituents probably more than any other subject.
	I am therefore grateful to the Transport Committee for producing the report, which covers the sort of local-national relationships of which Reading's transport infrastructure has many. Reading station is a national hub, and Crossrail might end up coming to Reading. In addition, the Heathrow link from the west, M4 widening and a third Thames bridge, which is important to north-south transport communication, make up the tip of a big transport iceberg facing my constituents.
	In many ways, it is no surprise that my constituency faces big transport issues. The area is growing economically, and has done extremely well from the economic reforms of the 1980s, and yet one sometimes despairs of my local authority's approach to local transport planning. Most authorities use the opportunity to consult, take the temperature locally and get people on board—literally, in some cases—for new transport projects. Reading's local authority, however, likes to have what I regard as sham consultations, in which local people never feel engaged. That is a serious point, because the Government have a duty, when funding local projects, to ensure that the projects have substantial local backing. If they do not have such backing, where is the accountability? What is the justification for handing over so much taxpayers' cash?
	For example, a one-way system around the town centre is currently being foisted on my constituents. Every poll in my constituency demonstrates massive opposition to a scheme that increases car journeys, worsens pollution and creates havoc for traffic bordering the Reading borough area. The scheme merely displaces traffic, costs £12 million to £15 million and has no local support—the neighbouring local authority is taking the matter to the High Court. Surely that is no way to fund and plan local transport in my area.
	When I wrote to Transport Ministers, asking them to intervene in this expensive folly, I was told that they could do absolutely nothing about it. Local people will therefore have to use what they will regard as the default option: if they want an expensive folly, they can vote Labour in the local elections; if they do not, they can vote Conservative. I know that when she replies to the debate the Minister will speak of local people making local decisions. I am entirely happy with that, but I predict that, in Reading at least, the local Labour transport councillor will struggle to hold his seat in May, if indeed he stands for re-election: he may withdraw to save face.
	That brings me to a second, important point about road pricing. Reading borough council is keen to use it, and, as the Minister will know, has been given a significant amount of money for a pilot scheme. I am not against road pricing in principle—many local areas might well support it, and it sometimes serves as a helpful local solution—but there are planning and funding issues. When I asked the Minister about them last week, her answer was not particularly reassuring.
	Although the Government deny it, there appears to be a link between access to investment funding to improve local transport and road pricing and congestion charging schemes. The chairman of Greater Manchester passenger transport authority has said:
	"We are being, in inverted commas, blackmailed."
	If that is true, it is nothing short of an abuse of funding and, indeed, power. Pushing or forcing local authorities to introduce road pricing by refusing to fund local transport schemes would certainly be an abuse of power. I urge the Minister to state categorically that there will be no strings attached to any bid for funding by a local authority, as it should be done without fear or favour.
	Gary Clarke, chairman of West Midlands PTA, said recently
	"The Government is trying to attach strings to this money"
	—by which he meant money from the transport innovation fund.
	"We were told that if we didn't put road pricing in the bid, it wouldn't help our case."
	Roger Jones, the Greater Manchester PTA chairman, said
	"The Government is pushing us very hard. They are saying 'you either follow our policy or you don't get the money'."
	Will the Minister tell us whether that is true? If it is, what action is she taking to correct what is happening?
	Members will understand my constituents' concern about road pricing and a road piloting scheme. There has been no local consultation, and there has been massive opposition; yet the scheme seems to sweep ahead like a massive juggernaut. It appears that local planning and transport are now a private and privileged matter between central and local government, consisting of a series of sticks and not many carrots. No wonder so many people are failing to turn out at local elections.
	Before the Minister responds to the debate—I can tell that she is winding herself up to do so—she may wish to look at the Secretary of State's speech of 10 May 2006, in which he said that the transport innovation fund would be used to support road pricing.

Clive Efford: I am curious about the hon. Gentleman's argument. He began by saying that central Government had failed to intervene in a difference of opinion between local people and a local authority and to make a decision. Now he seems to be arguing that central Government are imposing too much power locally. I am not sure what his position is on the relationship between central and local government.

Robert Wilson: Local decisions should be made as locally as possible, but there are occasions when there needs to be a way of appealing against decisions that are fundamentally wrong and undemocratic. That applies to my constituency at present.
	It is not all disagreement, however. There is one issue on which all parties in Reading agree: the need to upgrade Reading station. As we all know, Reading is a bottleneck on the national network, causing massive inconvenience and delays. Network Rail has pushed for it to be funded, as has First Great Western, because its trains are always arriving late; but funding has yet to be announced. I know that I keep banging on about this issue, but it is critical both to my constituents and to the national economy.

David Heath: I know that the hon. Gentleman will recognise that the massive inconvenience that he talks about is mainly caused to constituents in the west country and Wales who do not have a proper rail system simply because of the blockage in the system that is Reading.

Robert Wilson: The hon. Gentleman is right. That causes massive inconvenience to the west, but it also causes massive inconvenience along the north-west main line because Reading is also part of that network. As I have said, it is very much a national hub. The funding process for the Reading station project is very complicated, very long-winded and extremely bureaucratic, and I find it impossible to understand fully. Funding should be transparent and understandable, but it clearly is not.
	The Government are playing fast and loose with transport planning and funding, and they should step back from the profoundly undemocratic course that they are taking.

Graham Stuart: It is a great pleasure to follow my hon. Friend the Member for Reading, East (Mr. Wilson) and other Members who have spoken. The need for the Government to let go has been highlighted in all contributions—not least that of the hon. Member for Crewe and Nantwich (Mrs. Dunwoody), and the report of the Transport Committee, which she chairs, also makes that clear. That is the consensus across the House; the only Members who do not share it are those on the Government Front Bench. Why? We heard in an earlier debate that the Chancellor of the Exchequer has damaged health by centralising control, and that is also happening with transport.
	I intend my remarks to be brief—although I realise that Members often say that but fail to deliver. Yorkshire receives significantly lower transport funding than the national average. It is a dynamic area of the country, but many of its areas are in need of regeneration—a fact that Members in all parts of the House have mentioned. Many Members from different parties attended a reception last week at which the case was put for greater funding for Yorkshire. I hope that the Minister heard about that reception, and that she will receive inputs from Members across the political spectrum in support of Yorkshire's case.
	If Yorkshire were to receive fair funding—the national average outside London—proper attention could be paid to regenerating the Humber ports, which offer fantastic opportunities for economic and social improvement. If the Government, especially the Treasury, were to sort out their priorities, we would look at several matters, such as the ludicrous Humber bridge charges, which cause great hardship to those who need to access hospital services on the north bank and have a depressing economic effect on the whole region, particularly on the south bank, but on the north bank too. The Exchequer loses vast sums because of that failure of joined-up government. I hope that the Minister will be able to speak to colleagues in the Treasury and put the case, which I know is strongly felt by Members who represent the area, for lowering the charges and writing off some of the debt, which is spiralling and will never be properly repaid by charging to cross the Humber bridge.
	Fairer funding would also, and more directly, give the opportunity to revisit the issue of the Beverley to York railway line, and indeed that of the whole corridor from Hull to York, which could play an important role in the regeneration of Hull and allow us to capitalise on the contribution that the Humber ports make to the country as a whole. I pay tribute to the Minsters' rail campaign. It has for many years been chaired by my Labour opponent at the last general election, George McManus, who has persisted in pushing the case of the Minsters' rail campaign to reopen the Beverley to York railway line. The East Riding is an economically successful area of the country. It is fortunate in having a Conservative-led council that has the highest financial management rating in the country and is graded as excellent in its ability to implement transport schemes. Will the Minister consider the Beverley to York railway line?
	Will the Minister also consider the need to upgrade the A1079, on which there have been 16 deaths in five years and hundreds of casualties? I am grateful to her for meeting my right hon. Friend for East Yorkshire (Mr. Knight) and me to discuss that issue. The road goes from Hull to York and is vital for businesses and economic activity. Its current condition leads to substantial safety considerations. The Minister has agreed that her officials will work with our local authority in any way that they can to help it to get the best possible bid and to consider properly any bid that comes in. I know that people in Beverley, Holderness, Hull and York and all the areas in between look forward to that road being seriously improved to the benefit of the whole area.
	The theme of the debate so far has been the recognition that centralisation is not working and that we need innovation. There is no point in having a highly centralised innovation fund and falsely presenting it to the House as something that will create new ideas locally. It turns out that the fund will be even more centralised than current funding and can be used only to implement Government policy. The Chancellor's obsessive centralisation is damaging health delivery, as we have heard, and is also damaging the implementation of transport strategies. People in Yorkshire are browned off about health and transport; motorists and rail passengers are also browned off. It is time for a change. It is time for transport that works to be delivered through local ideas, control and leadership. That seems to be a common theme across the House. I hope that the Minister will announce a U-turn in Government attitude.

Clive Efford: The thrust of the Select Committee's report focuses on how the relationship between local authorities and central Government should develop. The debate has highlighted the contradictions in people's approaches to the issue.
	The hon. Member for Reading, East (Mr. Wilson) began his speech by suggesting that the Government were at fault because they did not intervene in a difference of opinion between a section of the community in Reading and the local authority over its decisions. He then complained that the Government are trying to impose policy from the centre. That demonstrates one of the difficulties with ensuring that the relationship between the Government and local government decision making reflects not only the policies of the Government, because they have an interest, but local needs. It must respect the fact that the people who are closest to the local community, and who are more directly responsible to it for week in, week out and year in, year out decision making, are best placed to respond to local needs.
	Without turning the debate into too much of a political knockabout, I make the point that Conservative Front Benchers have argued that congestion charging and local road charging should be a matter for local government, but we know that Governments are under a great deal of pressure to address climate change. Should the country ever make the mistake of re-electing a Conservative Government—

Robert Wilson: Coming soon.

Graham Stuart: That is coming.

Clive Efford: I think that both hon. Gentlemen will be drawing their pensions long before that happens.
	I can imagine a future Prime Minister going around the Cabinet table and asking how each Department is contributing to tackling the important issue of climate change, and the Transport Secretary saying, "I am delivering nothing because local government will not play ball." I really do not see that as a credible position, but, at the same time, there has to be some degree of local autonomy. That highlights the difficulty that we face in debating these matters.
	We have a democratically accountable transport authority for the whole of London and my area provides an example of some of the difficulties that communities face in getting a London-wide authority to pay attention to the minute detail of some of the transport issues at a local level. The authority looks at the broader picture. It quite rightly holds up the fact that it has been able to transfer a significant number of people from private cars to public transport and points to that success, but, at the same time, when local communities ask for minor alterations in bus services and extensions to local transport services, they find that their voices are drowned out in the wider context of the debate about London-wide transport issues. It is difficult for communities to get themselves heard. That is an example of what we are talking about in the relationship between local government and central Government.
	In an intervention on the hon. Member for Orkney and Shetland (Mr. Carmichael), a Conservative Back Bencher asked whether infrastructure should be put in place before major developments such as the Thames Gateway. The hon. Gentleman gave a rather curious answer. He seemed to suggest that we should hold up regeneration in the Thames Gateway area until such time as we have developed the transport infrastructure. I must point out that one of the most significant developments is going to be Crossrail. If we were to postpone development of the Thames Gateway area to wait for Crossrail, there would be significant suffering for people in that part of London. I suggest that he might want to reconsider the position that he adopted in his response to that intervention, because it certainly does not make any sense. I grant that it is desirable to put all transport infrastructure in place before development takes place, but if we were to postpone development until projects such as Crossrail were in place, we would be making a serious error and we would be perpetuating the suffering of a lot of people in the south-east who need that development.  [ Interruption. ] Yes, they will also need the infrastructure.

Graham Stuart: The hon. Gentleman is asking about a peculiar answer from the Liberal Democrats, which is hardly unusual, but he himself seems to be suggesting that, because the Government are incapable of delivering transport projects—as the hon. Member for Manchester, Blackley (Graham Stringer) laid out very well—housing development must go ahead, even though there will not be the infrastructure to support it. Surely it is not unreasonable to suggest that a co-ordinated Government should be able to put infrastructure in place before the people who need that infrastructure are living there.

Clive Efford: If the hon. Gentleman considers what he is saying, he will realise that there is transport infrastructure in place already. What we are talking about is expanding that infrastructure. That is essential to the development of the Thames Gateway area, which will take place over the next two decades, but I suggest that if we were to postpone decisions and postpone putting in place some of that development until that infrastructure were in place, that would make no sense.

Gwyneth Dunwoody: Does my hon. Friend agree that it might be quite helpful if all the private sources of finance that are so delighted and anxious to support major transport schemes and so keen on seeing Crossrail came forward now with a staged plan and a clear guarantee of the amount of money that would be required? That would allow Government money to go into schemes outside the south-east.

Clive Efford: I agree with my hon. Friend to a certain extent. She tempts me to debate the whole Crossrail issue, but I urge my hon. Friends on the Treasury Bench, as well as my right hon. Friend the Secretary of State for Transport, to consider the proposals for the Crossrail station at Woolwich. By comparison with any other station on the Crossrail line, we are putting in a large amount of private sector funding for the station at Woolwich to make its funding stack up.
	My last point is about regeneration. Local authorities that gave evidence to the Select Committee were clearly confused about whether regeneration as part of their local transport plan would score well in terms of the investment their proposals would attract from the Department for Transport. If we are looking to local government as the driving force for regeneration in an area, regeneration must be an essential part of its transport infrastructure development. I urge the Government to clear up the confusion about the score attached to regeneration when local transport authorities are developing transport plans.
	I return to the example of the Crossrail station at Woolwich, as it will be essential for my community, which is south of Woolwich. The station is vital not only as part of the regeneration programme to meet the needs of the north Kent and Thames Gateway developments, but for the wider community. One of my concerns about some of the infrastructure development that has already taken place is how people in communities not immediately adjacent to new stations and train lines will access the transport hubs that are being developed in the second phase. In particular, how can we reach deprived communities that could benefit from the new transport schemes? How do we provide links that benefit the wider community, not just people who live close to major infrastructure projects, or have easy access to them? Such projects have an impact in localities where they can assist in tackling social exclusion and increase participation in the economy. Their value cannot be overstated. It is essential that we take a wider strategic approach to major transport programmes. Local transport plans are at the heart of delivering them. In the relationship between central and local government, we need clarification of the role that regeneration plays in the development of local government plans.

Stephen Hammond: I am grateful for the opportunity to contribute to this debate on the Select Committee's report and the Government's record on local transport planning and funding. I commend the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) on her excellent introduction to the debate. There have been interesting contributions from both sides of the House.
	The speech of the hon. Member for Manchester, Blackley (Graham Stringer) was interesting in a number of respects. He argued his case forcefully—as he does often. My hon. Friends the Member for Beverley and Holderness (Mr. Stuart) and for Reading, East (Mr. Wilson) also made forceful contributions. The hon. Member for Eltham (Clive Efford) seemed to criticise another Member, but then fell into the same trap, especially on his point about Government and private funding of Crossrail.
	While the private sector has already guaranteed a certain amount, it is for the Government to tell us either how much they are going to put in, or whether they will support the project with a Government-backed bond, which would make the private sector funding even cheaper and more effective, and might even produce extra money to deliver the hon. Gentleman's Crossrail station.

Clive Efford: Before the hon. Gentleman becomes too critical of our Front Benchers, I must pray in their aid the fact that the matter is before a Select Committee. The Government's response to that Committee's report will come in due course.

Stephen Hammond: The hon. Gentleman is right, but he should not forget that the Government punted the issue into the long grass by referring it to the Lyons committee, which did not need to consider it.
	We have been discussing an excellent report that makes sensible recommendations and is the result of detailed analysis. The report makes interesting criticisms of the Government. I look forward to hearing the Minister's response to several of those points. As the hon. Member for Manchester, Blackley said, before we look at the report in a great deal of depth, it is instructive to explain the context of the situation and some of the promises that the Government have made over the past 10 years.
	The infamous transport plan of 2000 hangs like a millstone around the neck of Ministers as they pass in and out of the Department for Transport. The plan promised 200 major local road improvements and 70 bypasses. I am sure that the Minister will tell us exactly how many of those improvements and bypasses have been funded and built. On heavy rail, the plan said that the Government would provide new capacity to meet new demand and to improve the quality of services—two more failures there.
	The plan promised to
	"fund a substantial increase in the role of light rail in our larger cities and conurbations over the next ten years."
	It went on to promise 25 new light rail schemes. Later, the Minister will be able to stand up and count on the fingers of her left hand the number of light rail routes that have been introduced under the Government. The hon. Member for Manchester, Blackley made the point that funding approval has been revoked or turned down over the past couple of years for schemes in Manchester, Leeds, Liverpool and south Hampshire. Indeed, when the Transport Committee examined the matter in the last Session, it highlighted the clear tension that existed between local and central Government on light rail. Its report said:
	"Disappointment over the Department's decision to revoke funding for some Major Schemes has raised the profile of the relationship between the Department and local authorities in the context of projects such as light rail. There was severe criticism of the Department's decision to reject schemes which local authorities had judged to comply with national transport strategy and priorities, and present good value for money."
	That report echoes some of the criticisms about which we have heard today. The Department for Transport's changes to, and delays in, policy have added significantly to the cost of various schemes, and its value-for-money criteria are, at best, opaque. Local authorities have pointed out that they had little idea of what the Department was trying to achieve, of why their light rail schemes had been rejected, and of what they needed to do to get those schemes approved. Many of the targets in the 10-year transport plan that were set out in 2000 have not been achieved, and now the targets have been quietly dropped and are nothing more than aims.
	The hon. Member for Crewe and Nantwich said that local transport was a partnership. It is key to vibrant local communities and the lifeblood of local economies. The local transport that is provided in an area can define the area, its community and its economy. Local authorities are responsible for the provision and funding of such transport, but the funding comes from both local and central Government—that is the partnership. The interrelation between those two aspects of government defines how effectively transport is delivered. Whatever the Government's plans for the funding of local authority transport, one must hope, in the spirit of partnership, that they are somewhat better, and have more longevity, than the 10-year plan that was produced in 2000.
	The Government have talked a lot about devolving power to local authorities, but the harsh reality for many local councils is that the Government are imposing more responsibilities on them without the requisite extra funding. The fact remains that when it comes to transport, local authorities' freedom of manoeuvre is woefully inadequate, as authorities are entitled to bid for central Government money for local schemes that meet local priorities only if those local priorities are in accordance with the Department for Transport's diktat. That is one of the clear themes that comes through in the Select Committee report.
	In 2000, alongside the 10-year plan, the Government introduced a new framework for transport planning by local authorities, the local transport plan, and that is the essence of what the report is considering. The local transport plan imposed on authorities the obligation to produce a local transport plan every five years. The first phase was 2001-02 to 2005-06, and the next round, which is taking place at the moment, is 2006-07 to 2010-11. A notable feature of the local transport plan's first round has been the cost associated with the plans' production. The Select Committee report cites the average cost as between £50,000 and £200,000 per county council; in metropolitan areas, the cost is significantly greater.
	The report comments that the second round of the local transport plans has continued that trend. The Committee says that the production of Manchester's second-round local transport plan is reckoned to cost some £500,000. One wonders how much that would buy. How many improvements could be made to buses in Manchester town centre or on the Oxford road corridor for that amount? Yet that is just the cost of preparation. The preparation costs for the scheme are at a level that raises questions about the scheme's benefits. Are the local transport plan production costs proportionate to the investment secured, or the new transport schemes delivered? I look forward to hearing the Under-Secretary of State for Transport, the hon. Member for Lincoln (Gillian Merron), talk about the proportionality of costs.
	In introducing the debate, the hon. Member for Crewe and Nantwich talked about delivery, and the report is scathing on the subject of the delivery of transport improvements. Its conclusion is that little has been delivered, despite the capital investment made. To quote the report,
	"The gap between what was anticipated and what has been delivered in terms of local transport improvements makes it difficult to judge what has actually been achieved."
	Furthermore, it says that
	"on the existing evidence it is disappointing that there were not more transport improvements delivered".
	The Government's response to that criticism was to comment that there have been "substantial improvements"; I am sure that the Minister will expand on that in her speech, but there was no qualification or quantification of the statement. It is instructive to note that the other knee-jerk response, which is to say, "We've put the matter out to consultants, who will issue a report", was used, too. How long will that take, and how much will it cost?
	It is clear that the costs of producing local transport plans must have diminished the delivery of improvements. The guidance to local authorities has at times hindered the delivery of those plans, too. On that subject, there is criticism in the report about the guidance, but the Government's guidance is often less than transparent on other occasions as well. I was alerted to that particular feature of the Department's performance last week, in a slightly different context, when I spoke to the councillor responsible for transport for Christchurch borough council. When concessionary bus fares for senior citizens were introduced last year—the hon. Member for Orkney and Shetland (Mr. Carmichael) mentioned that earlier—local authorities were warned by the Government that they would have to notify bus operators of the arrangements for reimbursing them four months in advance of the April start date, or they might face action against them. The only trouble was that the Department issued the guidance in mid-January.
	We have spoken about first-round costs, but it looks like the second-round plans will incur extra costs, as the Department for Transport has issued revised guidance. Clearly, there has been recognition that the guidance associated with the first-round plans needed change and revision, but the Department's failure to alert local authorities to the fact that revised guidance was being introduced has undoubtedly caused a number of local authorities extra problems with delivery, and has resulted in extra costs for their bid preparation. The Select Committee report highlights that, and it will be interesting to hear the Minister's response on that point.
	The Department believes that the second round of guidance on plan preparation is less prescriptive than the first, but it is the only body that believes that; the view is shared by no one else. The Local Government Association said that the prescriptive nature of the guidance altered the relationship between the Department and councils. The reality is that although the Government provide extra funding through local transport plans—I shall come on to that in a moment—they seek, too, to override the local aspect of those plans. They speak about local plans and local action, but they are a centralising Government. It is possible to have a local plan if it fits central Government requirements, and that trait has become even more evident in the transport innovation fund that the Government have introduced.
	The Select Committee's report rightly makes the point that over-prescription of guidance has increased the costs and production time of local transport plans, without creating any greater certainty about funding, fulfilment, or indeed about delivery. What should a local transport plan comprise? Should it best reflect the needs of the local community and the local authority, or should it recognise the uniqueness of a local area, bearing in mind the fact that areas differ from one another? The answer is yes, but not in the Department for Transport. In 2002, the Department supposedly shared with local authorities priorities such as accessibility, congestion, air quality and road safety. Those are the Department's priorities, because it believes that local authorities are responsible for "delivering national transport objectives." If those four priorities reflect the priorities of local authorities, all is well. If they do not, the Government will use them to restrict what local authorities can implement, and much has been made today of the fact that regeneration criteria have been left out of those plans.
	The over-prescription and overriding of local priorities is highlighted by the fact that the revised guidance contains 16 pages on shared priorities—namely, the Government's priorities—and only two on other local priorities. Yet again, the Committee's report consistently highlights the fact that the Government speak about localising but act by centralising. Local authorities do not believe that they are free to set their own priorities; they believe that local transport plans are scored on how well it delivers national, Department for Transport-set priorities. If local transport plans are to deliver local objectives, the Government must revise their guidance one more time. It must be less prescriptive, and it must ensure that the scoring procedure for the weighting of local priorities against national priorities is transparent. That recommendation is highlighted in the report.
	The Government's most recent transport scheme—the transport innovation fund—also highlights their centralising nature. It was announced in July 2004, and when it was re-announced in 2006, the Secretary of State announced that it would be available only for packages aimed at tackling congestion and schemes that met productivity objectives. Yet again, the Government have centrally governed and micro-managed local transport. No one can be in any doubt that transport funding, via the transport innovation fund, is anything other than a national pot of money that carries national obligations for any local authority wishing to access it. My hon. Friend the Member for Reading, East rightly made that point earlier.
	I shall quote the Committee report one more time. It says that TIF
	"is nationally administered and bypasses the strategic frameworks provided by Local Transport Plans and regional transport strategies...it represents a move away from local determination."
	The theme continues throughout the report. The Government are not concerned about local priorities. My hon. Friend the Member for Castle Point (Bob Spink) is no longer in the Chamber, but on my visit to Southend, the councillors and officers of Southend borough council told me that they need to access funds for their local transport plan and, indeed, for a number of local transport improvements, but that they have no need for a congestion scheme. However, it is clear to them that if they do not include such a scheme in their TIF bid, they will not receive TIF funding. TIF is not
	"about local choice or local schemes...It is not about innovation; it is about central control."
	Excellent words, excellent summary; thanks once again to the Select Committee.
	The Select Committee makes some interesting points about funding in its report. First, it points out that in 2001-02 to 2005-06 there was an increase in capital funding available for transport. That is to the Government's credit. What is not yet clear is whether the increased capital resources in period 1 will necessarily be renewed into period 2. Paragraph 15 of the Government's response states:
	"The Government has set planning guidelines for investment in both block funding and major schemes that increase significantly",
	but elsewhere the Department states that authorities are encouraged to deliver their second round of local transport plan targets on the assumption that there are no new major projects funded by the Department. On one hand there is the promise of extra funding, and on the other the Government explicitly deny that it is available.
	As other hon. Members noted, the Department for Transport indicated that there would be extra capital funds for major schemes. During the first phase of local transport plans, the Government would not fund schemes below £5 million out of the budget, and authorities were not allowed to spend more than £5 million on a scheme without Government approval—a point raised by the hon. Member for Manchester, Blackley earlier. That resulted in a number of decisions being taken out of local authority control, where they might more properly have been made. It resulted in local authorities struggling to find funds to enable major schemes, and the limit of £5 million requiring central approval meant significant cost and time to prepare a bid.
	I recognise, as does the whole House, that the Department for Transport must ensure that the funding for schemes offers value for money, and that there must necessarily be a robust appraisal, but it is also clear that the bidding process is costly and in a number of cases diminishes the amount of funding available for delivery. The Department has stated that it is necessary for local authorities to undertake an appropriate level of appraisal work. True, but as the Select Committee report highlights the fact that it can cost 5 to 15 per cent. of the total cost of the project just to get a scheme to the stage where it can be presented to the Department for analysis, surely the Minister will agree with everyone else in the House and with the Select Committee report that that is sub-optimal, especially as the report states:
	"Rejected bids are likely to increase in number."
	The process is costly, and it is not clear whether there will be new central funding for major schemes between 2006 and 2011. The Government appear to be indicating that they will consider only major schemes already at provisional approval stage, and have said that it should be assumed that no new major schemes will be funded. That will inevitably undermine the efforts of local authorities to transform and revitalise their local transport networks. Yet again, the Government are talking big but failing to deliver, and talking local but centralising in action.

Tom Harris: Is the hon. Gentleman nearly halfway yet?

Stephen Hammond: About halfway.
	Let us leave capital funding and move on to revenue funding briefly. Atkins found that the lack of revenue funding was a major barrier to the implementation and maintenance of transport schemes. The Government often speak about local revenue funding of transport to promote social policy objectives, but the shortage is affecting bus and community transport. Last year the concessionary travel scheme for over-60s was introduced in local areas. The Government provided £350 million. When I telephoned 20 local authorities to check whether their allocated funding out of that money would cover the extra cost of the scheme, 19 said no and one was not sure. The £250 million that the Government have announced to implement the national scheme will clearly exacerbate the revenue funding problems for local authorities.
	Perhaps we should not worry too much about revenue funding, however, because riding over the horizon to the rescue comes the Lyons inquiry. So far Crossrail, Thameslink and funding for pretty much everything else has been held up while we await Sir Michael's report. Whether it proves to be the universal panacea remains to be seen. The report has taken two and a half years to reach fruition. We have no idea what he is going to recommend on the ability to raise local funds for local projects or what he is going to say about local business taxation for local transport projects. The Lyons report carries the hopes of many, but let us hope it is not an Eddington—promising much and delivering little.
	The conclusion one must reach if one looks at the Select Committee report and the history of the Government when examining their record on local transport and funding is that the Department for Transport says that it looks to local authorities to implement local schemes, but in reality it only looks to local authorities if those schemes comply with Government prescription and Government national priorities. Local transport plans are rated against national objectives and stand no chance of receiving funding unless they meet them. The reality is that the Department looks to local authorities to implement national priorities. That was reinforced by the Committee's earlier observation:
	"While the Department insists that councils are free to set their own priorities, this does not match the local authority interpretation of the guidance and assessment for funding."
	In addition— [Interruption.] I am still taking less time than the hon. Member for Manchester, Blackley.
	TIF is even worse. Any local authority can have the temerity to submit a bid based on its local needs, but it will be refused unless it fulfils a narrow set of national priorities. Be it phase 1 or phase 2 of local transport plans or TIF, little about transport planning or funding under this Government is local. The conclusion from the Select Committee report and the conclusion tonight is that this is a Government who talk local but act central.

Gillian Merron: I am pleased that we have debated local transport planning and funding. The subject is vital to achieving the Government's goals for transport. I am grateful to my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody) and her Committee for their work. It has informed us in the Department, as it always does.
	I am also pleased that the Select Committee chose to hold an inquiry into local transport planning and funding last year, and I welcome scrutiny of this important policy area. The Committee took evidence from many eminent and expert witnesses, including my hon. Friend the Minister of State. Hon. Members will have to decide for themselves whether he is eminent or expert, or both. I would suggest both.
	I welcome the Committee's support for the principle of a local transport planning framework. That is clearly within the Committee's thoughts. It is a core responsibility of local government. I am pleased that alongside the concerns that the Committee has highlighted, it has also welcomed many of the key recent policy developments, which include introducing a formula to distribute the funding support for local authorities for smaller schemes and changing the arrangements for councils to report progress to the Department. The Committee rightly identified those as necessary.
	I want to make some underlying points before addressing the particular points raised. Local transport plans are making a real difference. Substantially larger capital budgets are being spent on local transport. Government funding support has more than doubled compared with a decade ago. The investment has contributed to continued major reductions in serious casualties on local roads and even more rapid falls in the number of those who are seriously injured on our roads. I regard that as progress. That has also reversed the long-term under-investment in road maintenance. Again, I consider not only halting but reversing the decline in road conditions to be a major advance.
	A broader range of projects is being delivered. Measures are being taken locally to manage the use of cars more effectively and to encourage alternative ways of travelling. There is more consultation with stakeholders and the public, which I welcome. More effective schemes are being delivered, and delivery of schemes is being focused on the intended outcomes, a point to which I shall return later. Those are not just my opinions; they are some of the findings of the independent evaluation that the Department has set up in respect of this policy.
	I recognise that more needs to be done. The Secretary of State and I have undertaken a review of bus services: in some areas, we found real improvements being achieved in partnership between bus operators and local authorities, but all too often, as hon. Members have mentioned this evening, the current framework is still not delivering the services that passengers rightly expect. In December, we set out proposals in "Putting Passengers First" to modernise the framework to improve delivery, which was, of course, the biggest shake-up of bus services for 20 years since deregulation by the Conservative party.
	The Stern report highlighted the challenge of climate change, which is a key challenge for transport including for local transport planning. Over the past three years, the Department for Transport has worked closely with the Department for Environment, Food and Rural Affairs to foster links between tackling air quality and transport problems locally, which cuts across tiers of councils and across government. The broader issue of climate change is one to which we will apply ourselves even further as we develop local transport planning, and I know that many local authorities welcome that approach.
	The Eddington study examined the effects of transport on economic growth, competition and productivity. The local transport plan framework provides a way of considering action on transport locally in the context of wider issues, which the Conservative party has not acknowledged this evening but which we know takes place in reality. The Eddington study highlights buses in urban areas and sub-national decision making as critical delivery areas. We will therefore consider the findings of the study as we develop the local transport planning framework. All those points are responses to studies conducted outside the Department.
	Last autumn's local government White Paper, which has been referred to this evening, sets out this Government's vision of revitalised local authorities working with partners to reshape public services around members of the public and the communities that they serve. That means changing how the Government work with local authorities, so for local transport planning we are introducing less burdensome reporting to Government and providing more choice for localities to deliver the solutions that are right for their circumstances and priorities. I hope that that has addressed a number of the concerns raised in the House this evening.
	I value the Select Committee's report as we consider the way forward for local transport planning.

Graham Stuart: I am sure that hon. Members on both sides of the House, and especially those who have spoken this evening, will welcome the Minister's words about releasing central control. Does she accept the central tenet of the Committee report and of all the contributions made this evening that the Government have been too prescriptive over the past 10 years?

Gillian Merron: I do not.
	The record investment levels that we have set in government are being sustained. For smaller schemes, we have announced year-on-year increases for the next four years. Local authorities receive that funding as a block grant to enable them to identify and fund local priorities, with the level of funding for an area reflecting pressures and the Department's overall assessments of the local transport plans—I hope that that has set the record straight on funding. For larger schemes, decisions are made in the light of advice from the particular region and are met by either the regional funding allocation or, potentially, the transport innovation fund. The regional funding allocations increase year on year over the 10-year guideline period. I therefore find it difficult to recognise the reference to the Government imposing their will and refusing to fund, which is clearly not the case.
	On top of that, the transport innovation fund will provide substantial extra resources to those local authorities interested in addressing local congestion problems through innovative demand management responses. We are working with local authorities to develop local transport plans further, as the Committee wanted us to. I am happy to report that the Department and local authority officials are working together on how progress on delivering plans should be reviewed in future.
	The hon. Member for Wimbledon (Stephen Hammond) correctly reported our national priorities for local transport plans as tackling congestion, dealing with road safety, undertaking accessibility planning, and tackling air quality hotspots. However, contrary to what he said, those were all agreed with the Local Government Association. As that is Conservative led, I find it difficult to recognise the allegation that those priorities were imposed.
	My hon. Friend the Member for Crewe and Nantwich called for improved guidance. The Department issued final guidance on the second local transport plan 16 months before the final deadline for the completion of the plan. We recognise the need for local authorities, including those participating on joint plans, which we encourage, to have enough time to draft and approve their plans, and in future we will endeavour to publish guidance about plans even further in advance. We are here to support local authorities, not in any way to make life difficult for them. The Department is committed to enabling them to present local priorities within local transport plans, and the criteria are widely advertised and well known. There will be an assessment of the coherence of plans as a whole. People sometimes draw an artificial distinction on priorities, but these are common priorities locally and nationally. We are keen that local authorities find the right answers for their local areas and that we assist them in doing so. I wish to re-emphasise that we are working very closely with local authority officials to improve the manner of assessments.
	Reference was made to the possibility of increasing the threshold of the scheme to £10 million. Views have been put to us on that, although they are somewhat mixed. We gather that there is now a consultation on the regional funding allocations. It is worth saying that increasing the limit would reduce the ability of authorities to apply for extra funding for schemes, and that must be taken into account. Nevertheless, we are considering the matters that have been raised with us.
	The hon. Member for Orkney and Shetland (Mr. Carmichael) referred several times to a lack of boldness. I was reminded that it was once said that we are at our best when we are at our boldest. That is indeed the case when it comes to transport.
	As my hon. Friend the Member for Crewe and Nantwich said, the national concessionary fares scheme is extremely popular. The Government are extremely proud of it. From April next year, we will provide about £1 billion a year to fund concessionary travel, which we believe will be sufficient to ensure its roll-out. We do, however, recognise that local authorities have concerns about the distribution of funding. We are therefore considering several options in conjunction with local authorities, other stakeholders and users to find the right way forward for the roll-out of the scheme, which will benefit some 11 million pensioners and disabled people throughout the country.

Gwyneth Dunwoody: I am grateful to my hon. Friend for giving way. The scheme is important and popular, and the Government should take credit for it. However, may I have her word that a positive attempt will be made not only to work out the cost of administering the scheme but, where there is a need for harmonisation, to take account of some sort of equalisation when local authorities are being asked for their views?

Gillian Merron: I can confirm that that will be taken into account.
	My hon. Friend the Member for Manchester, Blackley (Graham Stringer) raised several points. He sometimes overlooked some of the positive developments in his area—for example, in July 2006, we gave conditional approval for Manchester Metrolink phase 3a extensions to Rochdale, Oldham and Chorlton. The Department will provide up £244 million, which fulfils the commitment made to Manchester in December 2004 that the £520 million package remained available, subject to detailed proposals.
	There is a delay on the Mottram to Tintwistle bypass because we are waiting for advice from the region on the schemes that are affordable within the budget. It is therefore not owing to national diktat; we are following local advice.
	The Government are not anti-tram. We realise that the tram can be an effective way in which to attract people to public transport and that it may be the best solution. However, it is also expensive and schemes will not be approved at any cost. Again, it is a matter of finding the right solution within the available resources.

Graham Stringer: My hon. Friend is not convincing me at the moment, hard as she tries. If the Government are not against trams, why does the consultation document not include any of the positive cases? The consultation finished on 9 March. I did not mention, for example, that the document does not compare like with like. It compares the revenue costs of buses with the capital costs of trams. How is that fair? Why does not the consultation document include any of the positive cases?

Gillian Merron: My hon. Friend the Minister of State heard my hon. Friend's comments. I confirm again that the Government are not anti-tram but that the right solution has to be found within the resources available. There are occasions when the bus is a better, cheaper, more effective and economic alternative.
	I was interested that the hon. Member for Reading, East (Mr. Wilson) talked about the Government playing "fast and loose". I have never known that said of a Government who have given conditional approval to a scheme to improve junction 11 of the M4 and make related improvements to Mereoak junction, which will allow Reading to invite tenders for construction. The Government expect to provide more than £62 million for the scheme, which will ease congestion on the main access from the M4 into Reading. If that is playing fast and loose, many hon. Members would welcome it.
	The scheme for Reading station was originally developed by the council with Network Rail. Following further review in the emerging conclusions of the Intercity Express project, a larger scheme than was originally envisaged is now required at Reading to create an interchange that is capable of handling the forecast growth in passenger numbers, including the possibility of new direct airport services. Key stakeholders, including my hon. Friend the Member for Reading, West (Martin Salter), support that view. The Thames valley regional planning assessment for the railway is in the final stages of development and is considering the required upgrade of Reading station. We hope that the required documentation will be published around Easter.
	On the Reading inner-distributor road, I, like my hon. Friend the Member for Eltham (Clive Efford), was somewhat confused because it appeared as though the hon. Member for Reading, East wanted local decisions at all times unless they were not the decisions that he supported. To clarify, I am aware that this is a controversial scheme. However, it is proposed in order to address congestion, which we all know needs to be done, and I also emphasise that the Department for Transport is not being asked to contribute any funds. I am aware that Reading borough council is fully apprised of the requirements on it.
	I would like to say a few words of clarification about the transport innovation fund. That is extra money allotted for an additional purpose: that fund is not taking money from anyone and no one is forced to apply for it. It has a separate set of requirements and criteria. It is intended to deal with both congestion and productivity. It is important to clarify that, as a misleading or strange impression has been created that TIF is somehow taking money away, but it is not.
	We had some discussion of road pricing, on which I am interested to see that the Conservatives have many views. The hon. Member for Epsom and Ewell (Chris Grayling) said:
	"Demand management is an option and we will look very seriously at road pricing."
	The hon. Member for Tatton (Mr. Osborne) said that the Conservatives were
	"sympathetic to the concept of road pricing",
	and the right hon. Member for Witney (Mr. Cameron) said:
	"Britain now needs a concerted programme of road building, accompanied by the introduction of advanced traffic management methods, including new solutions for road charging based on usage and the time of day".
	It seems to me that there is quite a lot of support among those on the Conservative Benches for the transport innovation fund, which I am delighted to discover.
	The hon. Member for Beverley and Holderness (Mr. Stuart) referred to Yorkshire not receiving enough money. Well, I must put further questions to the hon. Gentleman. From where would he seek to take the money and how on earth can he reconcile the call for more money for his own region with the various points put forward by his party about plans to share the proceeds of economic growth, which is a code for tax cuts? Indeed, in an article on ConservativeHome, which has since been removed, the hon. Member for Wimbledon called for £20 billion-worth of cuts, and the Forsyth tax reform commission advocated £16 billion-worth of cuts. I understand that hon. Members always want more resources for their own area, but it is incumbent on us to show some responsibility and say where that money will come from.
	My hon. Friend the Member for Eltham made the point, as forcefully as always, about the need for a further station in Woolwich under the Crossrail development. I have noted that and I can confirm that the Secretary of State is looking further into the matter and has committed to reporting back to the Select Committee on Crossrail.
	This has been an interesting debate. I have not recognised all the reflections on the Government's local transport policy, but I can say without any doubt that more funding and more effective planning is going into local transport today than was the case 10 years ago. The Select Committee supports the principle of local transport plans and I am grateful to it. I also welcome the constructive points that have been put forward. I can confirm that we are aiming and working towards further improvements in our support for local authorities so that they can achieve even better results in serving the people for whom they work. I hope that the House will support that.

Gwyneth Dunwoody: With the leave of the House, I would like to say that we have had a very useful debate. There is a great partnership to be had between local authorities and the Government and we look forward to developing it in the future.
	 It being Ten o'clock, Mr. Speaker  proceeded to put forthwith the deferred Questions relating to Estimates which he was directed to put at that hour, pursuant to Standing Order No. 54 (Consideration of estimates, &c.).

SUPPLEMENTARY ESTIMATES, 2006-07

Resolved,
	 Department of Health
	That, for the year ending with 31st March 2007, for expenditure by the Department of Health—
	(1) further resources, not exceeding £94,395,000, be authorised for use as set out in HC 293,
	(2) a further sum, not exceeding £1,000, be granted to Her Majesty out of the Consolidated Fund to meet the costs as so set out, and
	(3) limits as so set out be set on appropriations in aid.
	 Resolved,
	 Department for Transport
	That, for the year ending with 31st March 2007, for expenditure by the Department for Transport—
	(1) further resources, not exceeding £849,010,000, be authorised for use as set out in HC 293,
	(2) a further sum, not exceeding £533,764,000, be granted to Her Majesty out of the Consolidated Fund to meet the costs as so set out, and
	(3) limits as so set out be set on appropriations in aid.
	Mr. Speaker  then proceeded to put forthwith the Questions relating to Estimates which he was directed to put at that hour, pursuant to Standing Order No. 55 (1) and (3) (Questions on voting of estimates, &c.).

ESTIMATES, 2007-08 (NAVY) VOTE A

Resolved,
	That, during the year ending with 31st March 2008, a number not exceeding 42,240 all ranks be maintained for Naval Service and that numbers in the Reserve Naval and Marine Forces be authorised for the purposes of Parts 1, 3, 4 and 5 of the Reserve Forces Act 1996 up to the maximum numbers set out in HC 280 of this Session.

ESTIMATES, 2007-08 (ARMY) VOTE A

Resolved,
	That, during the year ending with 31st March 2008, a number not exceeding 125,785 all ranks be maintained for Army Service and that numbers in the Reserve Land Forces be authorised for the purposes of Parts 1, 3, 4 and 5 of the Reserve Forces Act 1996 up to the maximum numbers set out in HC 280 of this Session.

ESTIMATES, 2007-08 (AIR) VOTE A

Resolved,
	That, during the year ending with 31st March 2008, a number not exceeding 48,360 all ranks be maintained for Air Force Service and that numbers in the Reserve Air Forces be authorised for the purposes of Parts 1, 3, 4 and 5 of the Reserve Forces Act 1996 up to the maximum numbers set out in HC 280 of this Session.

ESTIMATES, EXCESSES, 2005-06

Resolved,
	That, for the year that ended with 31st March 2006—
	(1) resources, not exceeding £795,801,000, be authorised for use to make good excesses of certain resources for defence and civil services as set out in HC 243;
	(2) a sum, not exceeding £4,956,000, be granted to Her Majesty out of the Consolidated Fund to make good excesses of certain grants for defence and civil services as so set out; and
	(3) limits as so set out be set on appropriations in aid.

SUPPLEMENTARY ESTIMATES, 2006-07

Resolved,
	That, for the year ending with 31st March 2007—
	(1) further resources, not exceeding £6,125,169,000, be authorised for defence and civil services as set out in HC 293,
	(2) a further sum, not exceeding £7,122,263,000, be granted to Her Majesty out of the Consolidated Fund to meet the costs of defence and civil services as so set out; and
	(3) limits as so set out be set on appropriations in aid.
	 Ordered,
	That a Bill be brought in on the foregoing resolutions relating to Supplementary Estimates, 2006-07, and Estimates, Excesses, 2005-06, and the resolutions of 7th December relating to Supplementary and New Estimates, 2006-07: And that the Chairman of Ways and Means, Mr. Chancellor of the Exchequer, Mr. Stephen Timms, Dawn Primarolo, Ed Balls and John Healey do prepare and bring it in.

Consolidated Fund (Appropriation) Bill

John Healey accordingly presented a Bill to authorise the use of resources for the service of the years ending with 31st March 2006 and 31st March 2007 and to apply certain sums out of the Consolidated Fund to the service of the years ending with 31st March 2006 and 31st March 2007; and to appropriate the supply authorised in this Session of Parliament for the service of the years ending with 31st March 2006 and 31st March 2007: And the same was read the First time; and ordered to be read a Second time tomorrow, and to be printed [Bill 78].

DELEGATED LEGISLATION

Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Delegated Legislation Committees),

Tax Credits

That the draft Tax Credits Up-rating Regulations 2007, which were laid before this House on 30th January, be approved. —[Steve McCabe.]
	 Question agreed to.
	 Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Delegated Legislation Committees),

Environmental Protection

That the draft Environmental Offences (Use of Fixed Penalty Receipts) Regulations 2007, which were laid before this House on 31st January, be approved. —[ Steve McCabe.]
	 Question agreed to.
	 Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Delegated Legislation Committees),

Representation of the People

That the draft Representation of the People (Scotland) (Amendment) Regulations 2007, which were laid before this House on 6th February, be approved. —[ Steve McCabe.]
	 Question agreed to.
	 Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Delegated Legislation Committees),

Constitutional Law

That the draft Local Electoral Administration and Registration Services (Scotland) Act 2006 (Consequential Provisions and Modifications) Order 2007, which was laid before this House on 6th February, be approved. —[ Steve McCabe.]
	 Question agreed to.
	 Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Delegated Legislation Committees),
	That the draft Scottish Parliament (Elections etc.) Order 2007, which was laid before this House on 7th February, be approved. —[ Steve McCabe.]
	 Question agreed to.
	 Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Delegated Legislation Committees),

Housing

That the draft Housing (Tenancy Deposit Schemes) Order 2007, which was laid before this House on 8th February, be approved. —[ Steve McCabe.]
	 Question agreed to.

EUROPEAN COMMUNITY DOCUMENTS

Motion made, and Question put forthwith, pursuant to Standing Order No. 119(9) (European Standing Committees),

Taxation

That this House takes note of European Union Documents No. 17066/06, Commission Communication on Coordinating Member States' direct tax systems in the internal market, No. 17067/06 and Addendum 1, Commission Communication on Tax treatment of losses in cross-border situations, and No. 17068/06, Commission Communication on Exit taxation and the need for coordination of Member States' tax policies; and supports the Government's intention of combining a robust defence of the right of Member States to determine their own direct taxation policies in compliance with Community law, with a recognition that national tax authorities, within the EU and elsewhere, will continue to work together both bilaterally and multilaterally to ensure that their direct tax systems work together properly.— [Steve McCabe.]
	 Question agreed to.

MODERNISATION OF THE HOUSE

Ordered,
	That Mr. Edward Vaizey be discharged from the Select Committee on Modernisation of the House of Commons and Philip Davies be added.— [Steve McCabe.]

EUROPEAN SCRUTINY

Ordered,
	That Mr. Richard Bacon be discharged from the European Scrutiny Committee and Mr. Greg Hands be added.— [Rosemary McKenna, on behalf of the Committee of Selection.]

PETITION

Knife Crime

Bob Spink: I rise to present a most compelling petition, signed by well over 20,000 people, including key supporters Vicky Painter, Jessica Shidell, Ann Oakes-Odger, Melanie Hopwood, Charlotte Hall and Sandra Griffiths.
	Knife crime can kill young people, but it is too often dealt with by magistrates courts, which can give a maximum sentence of only six months. In reality, that involves serving only three months. That is simply inadequate, and does not provide the necessary deterrent to those who would go armed with blades to commit mayhem. The  Evening Standard front page tonight declares that 10 people were knifed in London only last night. This illustrates the validity of the petition better than my words ever could. I thank everyone involved in the petition.
	The petition states:
	To the House of Commons.
	The Petition of the supporters of the Knives or Lives? campaign, run by Essex FM, the Essex Enquirer and Essex Police in honour of Westley Odger, Tommy Jones, Andrew Griffiths and Kashif Mahmood, declares that clearer, more robust sentencing guidelines are needed for violent crime and particularly for those who carry out premeditated acts of violence with blades.
	The Petitioners therefore request that the House of Commons urge the Government to implement a policy whereby individuals convicted of violent crime, who knowingly carried the weapon to the scene, be awarded harsher sentences to reflect the element of premeditation in carrying the weapon. The Petitioners also beseech this House to advocate the introduction of a mandatory minimum sentence for knife associated crime, including the carrying of a knife without good reason.
	And the Petitioners, as in duty bound, will ever pray.
	 To lie upon the Table.

PASSPORT INTERVIEW CENTRE (TAUNTON)

Motion made, and Question proposed, That this House do now adjourn. —[Mr. Roy.]

Jeremy Browne: The context of this debate is the Government's recent announcement that people will be required to attend one of 69 passport interview centres, scattered throughout the United Kingdom, if they wish to apply for a British passport for the first time. In future all applicants for passports, including those renewing or replacing lost documents, will be required to report to one of those centres. My bone of contention is that Taunton, the town in Somerset that I represent, is not one of the 69 centres chosen.
	I want to make two points at the outset. First, my support for Taunton as one of those passport interview centres should not be taken to imply that I am in favour of identity cards—quite the opposite. It is extremely important that we maintain a healthy balance between the power of the state and that of the individual citizen. In a liberal democracy, the Government should be answerable to the people, not the people to the Government. I continue to be mystified and saddened by the inability of many Labour Members of Parliament to understand the importance of a liberal and benign state having proper safeguards against such measures.
	Secondly, as a preamble, let me say that I do not have absolute confidence that the new system of passport interviews will work as well as some in the Government might hope. Its implementation has already been delayed: it was meant to come into effect last year, and is now coming into effect this year. A Home Office spokesman was quoted recently in a newspaper as saying:
	"Customers who have not been contacted by the IPS"—
	the rather Orwellian-sounding Identity and Passport Service—
	"within 8 working days from receipt of a completed application form will not need to have an interview."
	It is not beyond comprehension that the system might not process everybody as effectively as the Government wish. From 2009, the system is being extended to cover about 4 million applications per year.
	My principal interest, however, is in the lack of a passport interview centre for Taunton, rather than in the merits or otherwise of passport interviews per se. It might help the Minister and other Members, who might not have been to Taunton, if I explain why it is so important that such a centre be provided.
	Taunton is the county town of Somerset and the home of the county council. It is also the town in Somerset with the largest population, by a significant margin. But even that understates its place in Somerset. As well as being the largest place and the county town, it is a big centre for employment, leisure and shopping. I always think that one can identify such a centre by asking people where their nearest branch of Marks and Spencer is, and for many people, not just those who live in the town, it is in Taunton. Musgrove Park hospital, the largest hospital in Somerset, draws in patients from across the county. Taunton therefore serves a much wider area and bigger population than its own.
	Under the current arrangements, people from Taunton will be forced to go to one of four places in rough geographic proximity to the town to be interviewed for a passport. Those places are Exeter, Yeovil—the only one in Somerset, despite being only about two thirds the size of Taunton in population—Bristol or, perhaps, Barnstaple in Devon. According to the Government's reckoning, people should be able to get to one of those centres within about 30 minutes following a journey of about 20 miles, but in this case it was thought reasonable to allow for a 40-mile journey and a journey lasting an hour rather than half an hour.
	A theme to which I shall return is that Taunton falls between two stools. It is not a metropolis—it does not provide the ease of communication provided by London and other big cities—but nor is it a remote rural area like the highlands and islands of Scotland. It suffers as a result of falling between classifications according to the Government's criteria.
	When the 69 passport interview centres are introduced, people in Taunton may choose to go to the town nearest in straightforward mileage: Yeovil, whose population is 41,871, compared with Taunton's population of 58,241. I apologise for all the figures that I am giving; they are necessary to illustrate my points, but I will try to keep them to a minimum.
	Yeovil is 28 miles from Taunton, so a 56-mile round trip would be necessary. The Government estimate that the one-way journey takes 48 minutes by car. Some people in Taunton may prefer to take the 47-minute journey to Exeter, which, being 36 miles away, is slightly further from Taunton, but is slightly quicker to get to because it is on the motorway. In either event, people would make a 56-mile or a 94-minute round trip to reach the nearest interview centre—and that is by car. Many people do not have access to cars.
	The bus journey from Taunton to Exeter takes about an hour and 20 minutes if there are no delays, while the bus journey to Yeovil takes about an hour and 15 minutes. Whether people can return to Exeter or Yeovil on public transport within a reasonable period will depend on the bus timetable, but it can safely be said that those who live in Taunton will have to take half a day off from their other duties and activities to travel to Exeter or Yeovil, or, if they prefer, to Bristol or Barnstaple.
	Although Taunton is the largest town in my constituency, I also represent a number of other significant population centres. The second biggest is Wellington, with a population of 13,696. People in Wellington would have to travel 28 miles to Exeter, 34 miles to Yeovil and further still to Barnstaple or Bristol, but only seven miles to Taunton. Many people in Wellington work or shop in Taunton. It is routine for people in Wellington to travel to Taunton; it is not routine for them to travel to Exeter, Yeovil, Barnstaple or Bristol—but that is what the new arrangements will require them to do.
	Another town in my constituency, Wiveliscombe, with a population of 2,670, is 11 miles from Taunton but, crucially, 29 miles from Exeter and 38 miles from Yeovil and Barnstaple. I say "crucially" because Exeter is, by the Government's own reckoning, one hour and four minutes from Wiveliscombe by car. That is above the requirement that the Government set themselves for rural communities, let alone what I regard as reasonable for people living in the Taunton area.
	I live in the borough of Taunton Deane, as do 102,298 other people. All those people would find it easier to go to a passport interview centre in Taunton than to a centre in any of the other towns. If Members envisage the number of people who would fit into the new Wembley stadium and then add 15,000 or so, perhaps standing on the pitch, they will have an idea of the population of Taunton Deane.
	There are other towns outside the borough of Taunton Deane whose populations would also find it easier to go to Taunton than to travel further afield. North Petherton, with a population of 5,190, is only eight miles from Taunton, but its inhabitants will have to travel to Yeovil, which is much further away. Bridgwater, a sizeable town in Somerset and outside my constituency, is just 12 miles from Taunton and handy to get to on the motorway; it has 36,563 inhabitants, and they will have to travel much further—again to Yeovil—for their interviews. Like Yeovil, Chard is in the South Somerset district council area; it has a population of 11,730, but it is closer to Taunton than to Yeovil. In the Burnham and Highbridge area there are 18,922 residents; it is 19 miles from Taunton, which again is closer than the current nearest interview centre, which for them would be in Bristol. Minehead on the Somerset coast has approximately 10,000 residents; it is 24 miles from Taunton, so that is not handy, but it is 40 miles from Barnstaple, its nearest interview centre, which is one hour and 20 minutes away. That is way beyond the Government's travel criteria.
	The total population of those places is 82,405. Therefore, there are approximately 102,000 people in Taunton Deane, and approximately 82,000 in some of the significant-sized towns outside Taunton Deane, for whom travelling to Taunton would be more convenient than travelling to any of the current proposed passport interview centres. There are also many people in villages and rural hamlets outside Taunton Deane and outside those five towns who are nearer to Taunton than to any of the current proposed sites. Therefore, for a total of more than 200,000 people Taunton would be a more convenient and useful interview centre for passports than any of the mooted locations.
	When I found out about the situation I wrote to the Home Secretary, and I received a response from Mr. Bernard Herden, the executive director of service planning and delivery at the Identity and Passport Service. First, he said that the plan had
	"taken into account consultations with authorities and agencies responsible for sparsely populated areas".
	No consultations were held with the council covering Taunton and there were no consultations in surrounding constituencies within Somerset. There were consultations with areas such as the highlands and islands of Scotland, but I emphasise again that Taunton suffers from being neither a grand metropolis nor as remote as the islands off the west coast of Scotland, for example.
	The second point that Mr. Herden made was that an effort had been made
	"to strike a balance between keeping costs (and therefore fees) as low as possible while making journeys to interviews as short as possible".
	As I have said, travelling for 47 minutes by car—and a lot longer and further by public transport—to get to an interview is the bare minimum journey time for those in Taunton. Therefore, in my view that balance has not been struck, and more than 200,000 people, including many whom I represent, will also feel that it has not been struck.
	Thirdly, Mr. Herden stated:
	"In remote, sparsely populated areas...we are putting in place videoconferencing facilities".
	I suspect that the Taunton area is not regarded as sufficiently remote or sparsely populated to qualify for video-conferencing facilities, so we are again in the invidious position of falling between two stools: we are not big enough to meet the criteria met by a big city such as Bristol, but not small enough to be given special treatment.
	Fourthly, Mr. Herden said that
	"we considered both private and public transport".
	I am surprised by that, as 47 minutes by car—that is one way, and people are likely to want to come home afterwards—seems to me a substantial journey, but the journey by bus or train is likely to take a lot longer. Many people in my constituency do not have access to a private car, so for them, that mode of transport will be the reality.
	Finally, Mr. Herden said in his letter:
	"Each location has been selected as part of a mutually supporting network; no individual location can be changed without affecting the whole network."
	I do not accept that adding an office in Taunton would cause the collapse of the so-called network. It would increase choice and availability for more than 200,000 people.
	I was not consulted about the proposal, but I would happily have run through some of the points that I have made tonight had someone asked me, as the parliamentary representative of the people of Taunton constituency. Nor, as far as I am aware, was there any consultation with Taunton Deane council or Somerset county council.
	I do not seek the closure of any of the existing 69 centres, but because of the concerns and criteria that I have raised, the Government could reasonably look to include Taunton as a 70th centre. If that does not happen, people in my constituency will incur considerable personal cost in travelling to and from their passport interviews. That will also take up a considerable amount of their time. People come into Taunton, if they do not already live in the town, to work, to shop, to go to the bank and to take out insurance—all the everyday exercises. They could incorporate into that routine going to a passport interview centre, but instead they will have to spend at least half a day going elsewhere.
	I have not estimated the cost to the environment, but there will be one if large numbers of people are required to drive substantial distances instead of visiting a passport interview centre in Taunton, which is not only the county town of Somerset but its largest urban centre.
	I appreciate that many hon. Members seek to make representations to the Minister and her Department about what they perceive as unfair treatment of their constituents, but in this case there is a strong and compelling argument for Taunton to have a passport interview centre. It is a natural centre not only for people who live in the town, but for those who travel to it for work and other reasons. I urge the Minister to take my argument in the constructive spirit in which it is intended, and to consider whether it is possible to accommodate the requirements of the 200,000-plus people who live in and around Taunton and who would benefit from having a passport interview centre located in the county town of Somerset instead of having to travel further afield.

Joan Ryan: I congratulate the hon. Member for Taunton (Mr. Browne) on securing this debate and on the sterling job he has just done on behalf of his constituents. The Identity and Passport Service is introducing a number of counter-fraud initiatives as part of the continuing fight against attempted passport fraud and forgery. The changes are critical because of increasing attempted passport and identity fraud.
	One of the most significant changes is to the passport application process for first-time adult passport customers. The change, which was first announced to Parliament in December 2004, is designed to help to stop fraudulent applications by improving the integrity and security of British passports.
	The United Kingdom is currently one of the few western countries that do not require first-time passport applications to be made in person. The key benefits of the changes will be to help to fight passport fraud and forgery; to help to protect the UK public from identity theft; and to ensure that the British passport stays one of the most secure and respected in the world
	The introduction of passport application interviews will mean that all adults applying for a passport for the first time must attend an interview with IPS in person to confirm their identity. The Identity and Passport Service is an appropriate name for what is a very good service. I stress that the changes do not currently apply to people wanting to renew their existing passport. The requirement for an interview will apply only to those adults who have never previously held a British passport in their own name. That is estimated to affect approximately 609,000 customers a year.
	The interview process is normally expected to take about 30 minutes, including an interview of between 10 and 20 minutes. At the interview, customers will be asked basic information about themselves—not deeply private information, but information that only they will know and that can be checked to confirm that they are who they say they are. I should make it clear that people who apply for passports will not have to give any more information than they do now and that the application forms will be unchanged. The interview is not about gathering information and the information used in the interview will be deleted from IPS records shortly after the passport is issued. The requirement to attend an interview will be introduced gradually and I will make further information on that available in due course.
	As the hon. Gentleman said, IPS is opening 69 local interview offices across the UK. The majority of customers will be within 60 minutes' travel of an office from their home or workplace. The network of 69 offices has been designed to provide an interview office within 15 minutes' travelling time via public or personal transport for just over half the population of the UK. More than 95 per cent. of the population will live within one hour's travelling time.
	The interview offices will not be new passport offices. They will be used only to conduct interviews and will not handle general inquiries or take delivery of passport applications. It is important for the hon. Gentleman to know that the interview offices will be open on Saturdays. I am conscious that he feared that constituents might have to have to give up a whole half-day once every 10 years, but in fact it is quite likely that that will not be necessary. Each day that an office is open, it will be open from 8 am to 6 pm, except for the seven smallest offices, which will open only two half-days a week.
	Deciding the location of the new offices was a careful and painstaking task. The hon. Gentleman mentioned that the offices were scattered. Perhaps that was just his way of referring to them, but I can assure him that deciding the location of the offices was not done in a throwaway manner. We needed to balance customers' wishes for the lowest possible additional increase to the passport fee with their wishes for convenient locations. Customer research was carried out in March and April 2004 and in July 2005. The results of both surveys showed that the majority of respondents felt that a journey of approximately 20 miles or half an hour one way, once in 10 years, was reasonable. The research also identified that, as he said, in more rural parts of the UK that expectation increased to approximately 40 miles or one hour's travel time.
	The IPS used mapping software and census data to model an office network, which, over several months, was subjected to independent verification by a specialist company and local consultation with authorities that are responsible for more sparsely populated areas. The hon. Gentleman is right: we did not consult Taunton. But we did consult Cornwall county council, Devon county council and a whole list of others. The work that we did used a range of data from the 2001 census, including—this is an important point—information on the distribution of people aged 16 to 34, which is the age range when most adults apply for their first passport. That was broken down by local authority wards.
	As I said, initially it is people who are applying for their first passport who will be subject to interview, so mapping where that section of the population live and their travel routes was crucial when deciding the location of the 69 offices. Journey-to-work data that show the proportion of people who use each mode of transport in different areas of the UK were also used. Those data were combined with data on travel costs and times to model journeys from a total of more than 220,000 population centres, of about 250 people each, to 264 potential locations. I think that the hon. Gentleman is aware that Taunton was included in the 264 potential locations. However, when we whittled the number down on the basis of the information to which I referred Taunton was not in the final 69.
	The aim was to design a network that optimised the number of offices to minimise costs and maximise operational efficiency—for example, through lower fixed costs and overheads and greater staff flexibility to handle the peaks and troughs of demand—while selecting locations that maximised the proportion of UK residents who would need to travel no more than 20 miles to their nearest interview office. Not everybody will fall within that limit, and not everyone will be able to reach their interview office within the ideal time, but the overwhelming majority come within what we, and they, consider a reasonable time frame.

Jeremy Browne: I understand the criteria and I realise that there cannot be offices everywhere. Inevitably, some people in remote rural communities will have to travel further, but will the Minister give an undertaking to put a pin on the map to show the location of each of the 69 centres? If she does so, she will see that Taunton is in a hole in the middle. It suffers from being quite near four centres, but falls between all of them, yet it is a sizeable population area to be in that predicament. Many other towns may fall into such black holes, but they are much less significant than Taunton.

Joan Ryan: I assure the hon. Gentleman that I took seriously his correspondence with the Department and the agency and the points that I realised he would make this evening, so I brought with me the colourful map I am holding up, which shows all 69 centres. I made sure, too, that I availed myself of information about the distances from Exeter, Yeovil, Barnstaple and Bristol of Taunton, Bridgwater, Wellington, Minehead and Chard. Chard is only 21 miles from Yeovil, but apart from that the range is as the hon. Gentleman suggests and the distance between some places and Exeter, Yeovil, Barnstaple or Bristol is somewhat further than 20 miles. However, none of those distances is excessive.
	I want to deal with some of the other points that the hon. Gentleman made. From the conclusions of the research and consultation, the IPS identified 69 locations that provided the right trade-off for efficiency, public travel expectations and the needs of sparsely populated areas. More than 82 per cent. of the population live within 20 miles of an office in the network, and more than 84 per cent. within a 30-minute journey. I accept that the hon. Gentleman is not talking about those areas, but the range of distances in the areas to which he referred is not unusual.
	The IPS plans remote interview facilities—to which the hon. Gentleman referred—in 25 locations. Consultations with regional stakeholders are ongoing. Those facilities will accommodate the fewer than 0.7 per cent. of possible first-time passport customers who live more than an hour's journey away from an interview office.
	The hon. Gentleman requests that an office be located in Taunton and I understand why he and other Members want an office in their constituency, but we have to balance cost with the number of offices we can provide, so not every town can have an office. The purpose is to provide locations that meet the requirement for best travel times for all passport applicants in each part of the country. The geographical location of offices is designed to meet that requirement. Each location has been selected as part of a mutually supporting network, so changing one location would have a significant effect on the balance.
	The measures are essential to protect our citizens from identify theft and to ensure that the British passport remains one of the most secure and respected in the world. We want to do everything we can to ensure that the service is as accessible, and at as efficient a cost, as it possibly can be. On the basis of that and an extensive mapping exercise, this is the solution—
	 The motion having been made after Ten o'clock, and the debate having continued for half an hour, Mr. Speaker  adjourned the House without Question put, pursuant to the Standing Order.
	 Adjourned at twenty-five minutes to Eleven o'clock.